What stimulus is there after a 0% rate?

There are generally two strands to monetary stimulus, firstly there are interest rates, and then there is the actual money supply. We’ll talk about both of them here and what will mean for consumers.

Interest rate drops drive money into an economy in a few different ways, obvious to most is that the cost of borrowing comes down, so if a company has to borrow to hire people they can do so, people need less to service debts which increases their disposable income and that puts more money into circulation. The other thing that happens is that bank deposits look less attractive, interest rates dropping actually cause rate compression, something we discussed here before, and that means money (especially at a 0% interest rate) will not sit on deposit and will instead move to corporate bonds which will thus be a way of extending credit to companies and they can finance projects.

In the past many would ‘fly to quality’ …

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Learn about Mortgages

If you want to learn about mortgages there are a few places to start.

Firstly you can take a course such as the ‘Mortgage Diploma’ offered by the LIA (Life Insurance Association – www.lia.ie) and that covers the subject in the fashion you would expect from a textbook, I personally feel that it is a good grounding but nothing can substitute experience.

Speaking to a person with several years of experience will enable you to get an insight into the working elements of mortgages and the things that separate good mortgages from bad ones, all mortgages were not created equal!

The people with experience are Mortgage Brokers, Bankers, Financial Advisors, Accountants and Solicitors. That is not an exhaustive list but it does cover the main industry players and if you want to get a good grounding spending some time with any of these people will go a long way towards educating you about mortgages.

The elements that define mortgages (if we are to take the main things) are LTV (that stands for ‘Loan to Value’), Rate, Term, and of course …

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