ECB Base rate increased 0.25% to 4.25% today

The ECB (European Central Bank) changed its base rate today to 4.25% which is an increase of 0.25%, the previous base rate of 4% had been left unchanged since its inception in June of 2007.

The move, while not favoured by borrowers, is vital in order to control Eurozone inflation which has been running well above the ‘at or just below 2%’ level that the ECB has intended to adhere to. In the first quarter of the year many commentators were saying that they believed we would see a rate reduction in the summer, this blog on the other hand argued otherwise in articles which were posted in mid March and again in mid April. As recently as May professional commentators (our crew is more along the line of humble observers!) …

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The Credibility Crisis

I have written before about what can be termed a ‘credibility crisis’ and when I used that terminology it was in reference to the collapse of Bear Stearns and the fact that Alan Schwarz had said on a Tuesday that there was no problems with the bank (reminding me of the Alfred E. Neuman ‘what me worry?’ pictures) and then come Friday they were nose-diving into closure.

Credibility is a large part of what the worldwide financial crisis is about, and how that plays itself out in the market is something that should concern everybody because the foundations of any economy are not just the laws or the constitution but instead they are also the financial and economic management structures.

Solicitors of the world may disagree with me however, I would argue that wealth of itself has little to do with civilisation and advancement, because countries like the Democratic Republic of Congo, Nigeria, and Iraq are incredibly wealthy nations in terms of what they potentially have but due to money not flowing (and political corruption of the economy) they will …

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All animals are created equal, but some are more ‘equal’ than others

The title of todays post is of course from George Orwell’s book ‘Animal Farm’ and in it the Pigs used this rationale to place themselves above the rest of society, the Pigs wanted one set of rules for themselves and another set for everybody else. And in the end the Pigs reigned supreme, the behavior of the Pigs was amiable in the early days, but it wasn’t long before there true colours came out.

Finance of course is a separate matter but I think that George Orwell struck on a common chord in his view of Socialism because when we see any sector of business society start to treat others less ‘equally’ it is reminiscent of how the Pigs fared, and the fact that although in the short term the Pigs might have the upper hand, that ultimately they end up on the table as pork chops.

I have the misfortune of seeing imbalance starting to creep into brokerage, in the UK it has started already, Halifax, Nationwide, and Cheltenham & …

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All animals are created equal, but some are more 'equal' than others

The title of todays post is of course from George Orwell’s book ‘Animal Farm’ and in it the Pigs used this rationale to place themselves above the rest of society, the Pigs wanted one set of rules for themselves and another set for everybody else. And in the end the Pigs reigned supreme, the behavior of the Pigs was amiable in the early days, but it wasn’t long before there true colours came out.

Finance of course is a separate matter but I think that George Orwell struck on a common chord in his view of Socialism because when we see any sector of business society start to treat others less ‘equally’ it is reminiscent of how the Pigs fared, and the fact that although in the short term the Pigs might have the upper hand, that ultimately they end up on the table as pork chops.

I have the misfortune of seeing imbalance starting to creep into brokerage, in the UK it has started already, Halifax, Nationwide, and Cheltenham & …

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Bubble Bubble, Boil and Trouble, Markets Quake and Markets Crumble

There is talk about the property bubble, and now an oil and gold bubble. Commodity prices have had a massive bull run, so will does this bull still have ground to cover? There is a real possibility the answer is yes… quite so.

Commodities have cycles like any other product, there are cycles such as ‘winter demand’ for oil, or a rise and fall as economies boom and bust, but then there are structural cycles that have to do more with supply and demand. There has been (for instance) a big upsurge in demand for oil but Opec have not increased output in order to meet the demand. The US Economy is slowing down (don’t use the R word!) and Europe is following, so if some of the major markets are starting to slow then what will that do to Oil or other commodities?

Oil prices in Euro’s prices went from €16 to €68 because the Euro got so much stronger against the Dollar, so is the solution to buy from the Iranian Oil Bourse which deals in euros? Supply …

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What is a mortgage broker? Why use a mortgage broker?

Today’s blog entry will be shorter than usual, because I have to leave soon to go to the annual MoneyMate awards for 2008, Irish Mortgage Brokers has been shortlisted for Mortgage Broker of the Year. The awards are kind of like the Oscars of the Irish finance world, it’s a time when all of the incredibly dull folks (like me) get to let our hair down and talk about things like APR and not have to be ashamed. Just kidding, it’s actually a savage craic shin-dig. We were shortlisted last year as well, and in fact I’m hoping that we can stop being the bridesmaid and become the bride this time around!

We have gotten a few queries lately from people asking about mortgage brokers and what we actually do, because I work in this industry for a living I was under the assumption (now proved to be false) that people knew what we do. I went out onto Lombard Street and asked a few folks, …

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What are the best mortgage rates? Mortgage Interest Rates explained.

What are the best Irish mortgage rates? What are interest rates and where do they come from? These are all good questions and in today’s post I hope to answer some of them.

Often I find that people call me and ask ‘what’s the best rate’ and then there is silence on the other end of the phone as they await an answer. The truth is that at any given time there is a ‘best mortgage rate’ out there, but normally there are restrictions surrounding it which inhibit the ability for most borrowers to avail of them.

We have come out of eight rate hikes which began at the end of 2005, and in an upward rate market people often feel that their old loan has become expensive, in fact it’s not necessarily the case that the ‘old loan’ is exceptionally dear, its that the rate market has gone up and therefore the cost of all loans has gone up, when we talk about the greater ‘debt burden’ that’s what we are referring to, because car loans, higher purchase, leases, …

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First Time Buyers can’t catch a break

First time buyers are being told ‘now is the time to buy’ in the papers. I think it’s time to spell out a few home truths for the prospective buyer just so that they are 100% sure of what they are getting into. Buying a home is fundamentally a good thing, doing so without knowing the facts however is not.

Firstly, property is in a downward market at the moment, that’s not opinion, its a fact. You can dress it up as a ‘re-adjustment’ a ‘balancing out’ or an ‘inter-cusp reductionary period’, heck, call it ‘my granny’ for all I care, it’s still down, plain and simple. So if you put an offer on a property and an Estate Agent tells you ‘you have to sign soon or you’ll lose the place!’, then lose it (unless they accepted an offer so low you have to snap at it!) no guilt, no apologies, and don’t you dare pay full asking price! The current Irish property market favours the buyer not the seller. I would even advise our clients to offer below …

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First Time Buyers can't catch a break

First time buyers are being told ‘now is the time to buy’ in the papers. I think it’s time to spell out a few home truths for the prospective buyer just so that they are 100% sure of what they are getting into. Buying a home is fundamentally a good thing, doing so without knowing the facts however is not.

Firstly, property is in a downward market at the moment, that’s not opinion, its a fact. You can dress it up as a ‘re-adjustment’ a ‘balancing out’ or an ‘inter-cusp reductionary period’, heck, call it ‘my granny’ for all I care, it’s still down, plain and simple. So if you put an offer on a property and an Estate Agent tells you ‘you have to sign soon or you’ll lose the place!’, then lose it (unless they accepted an offer so low you have to snap at it!) no guilt, no apologies, and don’t you dare pay full asking price! The current Irish property market favours the buyer not the seller. I would even advise our clients to offer below …

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US fed will inject $200 billion in cash in an effort to end the credit crunch

The United States Federal Reserve have announced that they will give a $200 billion dollar cash injection to ease the tensions in the credit market that are threatening to stall the wider US economy. They will buy mortgage backed security in return for cash and that will hopefully free up the credit markets and lending. Does that mean the Fed is taking on the risk the banks created? In a nutshell, yes, it does mean that, they are going to accept mortgage backed bonds from banks that were finding it hard to raise cash through the normal channels. So these institutions are not good enough for the market but they’ll do for the Fed.

The banks and financial institutions have taken a beating due to the credit crunch but it seems now that the fed is willing to stand up and be hit on behalf of the banks, so its like a guy who steps in to break up a fight and he turns out to be …

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