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Don't Take Out A Mortgage In A Foreign Currency
Comments
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Interesting thought. Suppose a bank were to offer an RPI-linked mortgage - rock-bottom interest, but the principal increases with RPI so you have to pay the loan off in real money.
Any takers? Why not?.
It is an interesting thought, but I can't see it happening. A bank has little interest in RPI, but every interest in cost of money. So to link it to RPI is linking it to the wrong thing.
A variable rate mortgage is the 'technically correct' way from the bank's perspective. There is probably a longer term relationship between RPI and Interest Rates, which means that the standard variable mortgage is pretty much the same thing anyway.0 -
Loughton_Monkey wrote: »It is an interesting thought, but I can't see it happening. A bank has little interest in RPI, but every interest in cost of money. So to link it to RPI is linking it to the wrong thing.
A variable rate mortgage is the 'technically correct' way from the bank's perspective. There is probably a longer term relationship between RPI and Interest Rates, which means that the standard variable mortgage is pretty much the same thing anyway.
Thanks, I won't consider taking out an RPI based mortgage then (along with 99.99% of the population).
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Don't Take Out A Mortgage In A Foreign Currency
Rather a silly piece of advice.
If you had taken out a Mortgage in Kenyan Shillings in August 2007, a £500,000 Loan ( KES 6,650,000 ) would only leave a £468,000 (not including repayments) amount outstanding today :eek:
..or maybe in Seychelles Rupee...........or hang about, the good old Sierra Leone Leone, now that would have been a real winner :j'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
I'm feeling smug...
A few years ago, the only mortgage lender who would give me all the money I wanted would only make loans in Zimbabwe dollars. The interest rate was a bit stiff, but I really wanted my dream house and so I decided to go for it.
Fast forward a few years. When I decided to pay off the mortgage in full, the cheque I posted to my lender was for less than the price of the postage stamp I used to send it to them.
Just for the record: I understand that the Seychelles Rupee is one of the hardest currencies in the world. Back in the days when my salary came in them, it was linked to the IMF Special Drawing Right, and so was as good as a piece of gold.0 -
But if there are no takers, the conclusion must be that the housing/mortgage market is entirely predicated on continuing inflation. Nobody would want to buy houses if real interest rates weren't permanently pegged at sod-all.Thanks, I won't consider taking out an RPI based mortgage then (along with 99.99% of the population).
Siomething to be borne in mind by the economic back-to-basics brigade.
Putting it another way, a sterling mortgage is also a currency speculation. There have been periods of deflation."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
But if there are no takers, the conclusion must be that the housing/mortgage market is entirely predicated on continuing inflation. Nobody would want to buy houses if real interest rates weren't permanently pegged at sod-all.
Siomething to be borne in mind by the economic back-to-basics brigade.
Putting it another way, a sterling mortgage is also a currency speculation. There have been periods of deflation.
Or that a ten year fix at 3.99% would be better?0 -
So what kind of inflation expectations are priced into that? How cheap would it look if zero inflation was expected?Or that a ten year fix at 3.99% would be better?"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
RPI includes mortgage payments, so better to use CPI to link to a mortgage for fairness.
I might be temped, over the last 15 years Im pretty sure CPI has been less than mortgage rates, and Im not a doomster expecting hyper inflation in the next 10 years.Faith, hope, charity, these three; but the greatest of these is charity.0 -
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