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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The stage is set for Euribor Trackers now that ECB ones are gone.

The market recently witnessed the death knell of the last tracker available, it was Leeds Building Societies high margin ECB + 2.2% offering. Previous to this we heard announcements from Bank of Scotland, AIB, BOI, ICS, Haven, Ulsterbank, First Active, IIB, PermanentTSB and every other lender that trackers were being withdrawn.

So now we have moved from a market where trackers were a key point of competition and value to one where they don’t even exist. This has had a key effect of removing transparency from rates, for instance, how is a Variable Rate determined? The future landscape of mortgages is likely to be some mish-mash of “fixed-variable-another fixed-fixed again-back to variable” it will be a non-transparent massacre of rates where the concept of ‘customer inertia’ will become only stronger.

If people find themselves in a market where they don’t understand long term value then there can be no responsible long term value decisions made. To put that in perspective: If you are getting a …

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Mortgages Online: Online or Internet Mortgages explained.

I heard countless anecdotes about online mortgages over the past few years and to be fair I felt that people were fundamentally right about things, that the mortgage market would go to the web to a large degree the way so many other things have.

Dunnes Stores strongest growth area is Internet shopping and I think Tesco would likely say its a big growth area as well, no need for retail space, people can browse as they see fit etc. so surely the same thing would happen across countless sectors? Right? Even finance?

Wrong… Well, not fully right anyways. If you look for an online-mortgage the likelihood is that you will be asked to fill in some information and ultimately a human being will still contact you and you will then send in documentation to them etc. it won’t be ‘online’ in the sense that buying a plane ticket is ‘online’ (i.e.: zero requirement for human interaction/intervention), however in this article I will outline the possibility for mortgages online and how I think the successful players will approach it.

Firstly …

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