Mortgage after (currency) breakup

funkhouser

If I take out a mortgage tomorrow morning and the next the day the Eurozone disintegrates will my mortgage a: be then paid back in punts 1:1 or b: will I still owe X Euro every month regardless of the value of the punt and be required to make up the difference myself or c: not known.

Yes, this scenario will make the last few years look close to the Celtic Tiger in terms of prosperity. Yes, there would have to debt writedowns in most cases. Yes, x y z. Just wondering if there's a simple a/b/c answer.

phormium

No one knows the definite answer to that.

andrew

funkhouser wrote: »

If I take out a mortgage tomorrow morning and the next the day the Eurozone disintegrates will my mortgage a: be then paid back in punts 1:1 or b: will I still owe X Euro every month regardless of the value of the punt and be required to make up the difference myself or c: not known.

Yes, this scenario will make the last few years look close to the Celtic Tiger in terms of prosperity. Yes, there would have to debt writedowns in most cases. Yes, x y z. Just wondering if there's a simple a/b/c answer.

AFAIK there isn't a simple answer to this, since it could go either way for a given debt.

Branch

I wouldn't be worried about what currency you'd have to pay it back in. I'd be more worried about the interest rates. If we did go back to punts the banks would have to buy money at very high rates...like 16-17% back in the 80's

I'm in the same boat...Variable sounds good but fixed maybe best for a few years considering the uncertainty.

euroboom13

forget about curency break up....fairy tale.(morgage would be least worry if this happened)

i would be watchful of interest rates and factor in a possible 8/9%or more.

euro is heading for inflation and higher rate`s after these bailouts.FACT!!!(my opinion only:cool:)

krd

funkhouser wrote: »

If I take out a mortgage tomorrow morning and the next the day the Eurozone disintegrates will my mortgage a: be then paid back in punts 1:1 or b: will I still owe X Euro every month regardless of the value of the punt and be required to make up the difference myself or c: not known.

This is one of the reasons a Euro break up is unlikely - no matter what the screeching tin foil hat brigade have been going on about over the last few years.

If your mortgage is denominated in Euro, it's not as simple as someone waving a magic wand and it becoming denominated in a new currency.

Several accounts I heard, have claimed that the break up with unleash a torrent of interbank litigation that would drag on for years - the banks (including US banks) trying to get their hands on the hardest denomination.

If your mortgage was denominated in the new punt, it might be great news for you. The new punt would see inflation - which would inflate your mortgage away.

krd

euroboom13 wrote: »

i would be watchful of interest rates and factor in a possible 8/9%or more.

Unlikely.

euro is heading for inflation and higher rate`s after these bailouts.FACT!!!(my opinion only:cool:)

These bailouts aren't free money. They're more loans. They may be "stabilising the banking system" but they're just putting countries in worse positions.

They're actually having an opposite effect to inflation - money being used to service debts does not cause inflation.

A little, or a lot of inflation would be a good thing. It would inflate countries and individuals out of debt. It would force anyone hoarding cash to use it or lose it. Inflation is inevitable because there's growing demand for resources around the world. The Chinese have begun guzzling gas in earnest.

Savers can only expect a return on their savings if there's growth - the only other option is to gouge a return out of people who've little left to gouged of.

euroboom13

Euro is not goin to be able to restrian inflation when recovery comes..

we will have a few yrs of an over stimulated europe, with medication of crippling interest rates!

Already jump starts arent working and what fixes this crisis will over stimulate!(small boom restrained by interest rates)

Thats what i`m seeing!Thats what markets are waiting for!

seamus

andrew wrote: »

AFAIK there isn't a simple answer to this, since it could go either way for a given debt.

Pretty much. Even if it goes on a 1:1 basis switch to punts, the value of the punt will collapse overnight and banks will need to drive interest rates way up in order to service the debt.

If you keep your mortgage in euros, the punts you're earning from your employer will be worth less, and your repayments will be in euros, leaving you at the mercy of the exchange rates. Imagine today having to repay your mortgage in Sterling and you get the idea.

An all-out collapse of the euro where it's dropped by everyone is practically impossible, but there's no way of saying what would happen to mortgages then.

krd

euroboom13 wrote: »

Euro is not goin to be able to restrian inflation when recovery comes..

Do you have a crystal ball? You're actually scaremongering.

we will have a few yrs of an over stimulated europe, with medication of crippling interest rates!

At the minute there's virtually no stimulation - we have crippling austerity. The only beneficiaries of the bailouts have been bankers.

Quantative easing has been used by bankers to speculate and gouge on commodities. None of it has had any real stimulant effect - it's brought inflation all right, but no economic growth.

Already jump starts arent working and what fixes this crisis will over stimulate!(small boom restrained by interest rates)

What jump starts?............ Usurious loans on top of usurious loans?

What they seem to be trying to do is keep people unemployed and suppress wages while shovelling bonuses at bankers - and trying to recapitalise banks, so the economically and socially worthless property flippers can get going with their property flipping again.

Thats what i`m seeing!Thats what markets are waiting for!

With your crystal ball. If the markets were actually efficient and could see anything, then we wouldn't have had a crisis in the first place.

euroboom13

krd wrote: »

Do you have a crystal ball? You're actually scaremongering.



At the minute there's virtually no stimulation - we have crippling austerity. The only beneficiaries of the bailouts have been bankers.

Quantative easing has been used by bankers to speculate and gouge on commodities. None of it has had any real stimulant effect - it's brought inflation all right, but no economic growth.



What jump starts?............ Usurious loans on top of usurious loans?

What they seem to be trying to do is keep people unemployed and suppress wages while shovelling bonuses at bankers - and trying to recapitalise banks, so the economically and socially worthless property flippers can get going with their property flipping again.



With your crystal ball. If the markets were actually efficient and could see anything, then we wouldn't have had a crisis in the first place.

"if the markets were actually efficent "
thats where the problem is and thats what europe will struggle

I`m not scare mongering ,i`m being possitive .
growth is what we need.
Higher interest rates always follow historical lows.And people need to be prepared..(4.9% new rates now +@ 3%ecb this would be 6.9%...easily without inflation)
The days of 1% rates will be a thing of the past.(i`m i wrong)
Thats being realistic!!!!

krd

euroboom13 wrote: »

The days of 1% rates will be a thing of the past.(i`m i wrong)
Thats being realistic!!!!

Well, maybe 1% was always too low.

But it wasn't just the rate was too low. It's who they gave the money to. And it was the same in every country - gave it to thick builders. Spain now has more airports than Germany. Not to mention over a million empty houses.

There are people in the Irish bildin trade seriously calling for a demolition programme of unsold houses to kick start "the market". Get them back bildin. We'd probably be far better off if we gave away all those houses in the west of Ireland to wealthy American, German and even Chinese and Russians.

The kind of recovery many in power in Europe would like to see, is an inflationless return to growth - which would mean suppressed wages, and sky high rates of unemployment. People like Christine Lagarde are more concerned about their property portfolio than getting the economy functioning again. You can only pull the same trick so many times until it no longer works.

If we had a few years of really high inflation - it might be hard at the time - people with mortgages might feel a lot of pain, but when it's over, their mortgages will have shrunk to a fraction of what they were. They'll have cash to spend on their children and on the kinds of goods and services that make an economy function.

euroboom13

thick developers got cheap money off thick bankers ,and built houses that sold to thick investors (and homeowners),whom got money off thick bankers..While rte /media advised buy !!.....fact, in hindsight!

and to fix problem,ecb gives cheap money to start things off again.

if inflation stayed @2% and interest rates at 3% things would be good allround...

but i see inflation @ 4/5% easily and morgage rates at 7/8% easily(speculative boom,like china now)
Will cause pain short term and debt reduction long term...

onethings for certain things wont stay the same for very long

I am no mystic meg.......but watching keenly

euroboom13

and there is a buyer out there for every unwanted house, site ,s##thole in the country if the price was right and the sellers were made sell....

they wouldnt get a good price but it would bring valuable cash back into the system and start some sort of building work.

auction immediately....firesale.....bring every bit of spare cash out from under the matress and back into the economy....

waiting for market only holds things up

krd

euroboom13 wrote: »

thick developers got cheap money off thick bankers ,and built houses that sold to thick investors (and homeowners),whom got money off thick bankers..While rte /media advised buy !!.....fact, in hindsight!

and to fix problem,ecb gives cheap money to start things off again.

That seems to be the strategy. But it's probably not going to work. Wages are just too low across Europe to give people mortgages at the current prices. Even the speculators aren't that stupid.

and there is a buyer out there for every unwanted house, site ,s##thole in the country if the price was right and the sellers were made sell....

Some of these "sites" you'd be very surprised to see what they are. Some are very literally bog fields prone to flooding - banks gave millions for them. I know of a farmer getting 9 million for a bog field beside a rubbish dump - he had bought the field just a few years earlier for about 4 grand. It's probably only worth 4 grand. It's a bog field beside a rubbish dump.

Sam Russell

I have the fealing that the current situation is like being on a flight where the oxygen masks have descended and the plane is in a nose-dive. Hope we survive.

euroboom13

krd wrote: »

That seems to be the strategy. But it's probably not going to work. Wages are just too low across Europe to give people mortgages at the current prices. Even the speculators aren't that stupid.



Some of these "sites" you'd be very surprised to see what they are. Some are very literally bog fields prone to flooding - banks gave millions for them. I know of a farmer getting 9 million for a bog field beside a rubbish dump - he had bought the field just a few years earlier for about 4 grand. It's probably only worth 4 grand. It's a bog field beside a rubbish dump.

4 grand cash back in the system , is the only starting point here for sustainable growth.......if things stays the same that 4000euro not moving(9m fairytale on banks computer)........nama /private investors are all waiting for things to come back.........force those whom cant hold to sell and then value buyers put there cash into the system......and money starts to move......if u dont get in quick prices go up....and were off again!

The alternative is 4 more years of same same!!!

The 4000e exists now ,thats the start..

And thats in the worst case /average case better than 70% loss
100b property =30b back in circulation HAPPYDAYS:D

Pain in the h**e but a start!!