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Euro / Mortgage Question

  • 07-08-2011 2:23pm
    #1
    Dead Kennedys
    Registered Users, Registered Users 2 Posts: 87 ✭✭


    Hi Folks,

    Just wondering if the Euro was to fail what would happen to Tracker Mortgages that are linked to the ECB?

    or

    If the Euro continued but Ireland pulled out and reverted to the Punt....


    Thanks,

    DK


Comments

  • #2
    Love2Live
    Closed Accounts Posts: 1 ✭Love2Live


    I hope this helps your question!!


    Your mortgage
    If you're lucky enough to have a cheap tracker mortgage, some believe you might have to kiss goodbye to it if Ireland leaves the eurozone. "The interest rates on your mortgage would be set to the Irish punt," said Mr O'Doherty. "That means your ECB tracker would disappear."
    Your tracker mortgage is a contract which you have with your bank, so whether or not you would lose it if Ireland left the eurozone remains to be seen. However, if the interest rates on mortgages were tied to the Irish punt after an Irish exit of the eurozone, interest rates could soar.
    Less than 20 years ago, a currency crisis hit Ireland. The Irish punt was devalued by about 10 per cent at the time and Irish interest rates reached unprecedented levels. Mortgage interest rates in Ireland climbed as high as 16 per cent in 1993.
    Those who had taken out a loan from a European bank would also be walloped. An Irish citizen would find it much harder to pay back a mortgage in euro if he is being paid in punts -- as the punt would very rapidly be worth a lot less than the euro.

    http://www.independent.ie/business/personal-finance/surviving-the-recession/what-would-happen-to-your-money-if-ireland-defaulted-2647568.html


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