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When ECB rates rise


louball

Member
Joined
May 24, 2007
Messages
8
Sorry in advance if this topic is already discussed.
I was working on my household budget..which is always a year or so in advance and didnt know what to predict my mortgage payments any further than the next few months

So I was just thinking about when the ECB rates will start rising again and does anyone have any predictions?

it looks like a cut is on the cards this week and then assuming no more cuts..as soon as say Germany show recovery signs will they rise again and when do you think it'll be? end of 2009 ..first qtr of 2010??

if Ireland is still in a bad way at the time, with income tax and whatever other taxes in the December budget being targeted and then the rates rise its going to leave a lot of mortgage holders in trouble.

anyone got any thoughts or am I worrying needlessly as who knows whats down the line!

thanks
 
Last edited:

jimmyfour

Active member
Joined
Oct 10, 2007
Messages
195
anyone got any thoughts or am I worrying needlessly as who knows whats down the line!

thanks
No you are not worrying needlessly. Assume that within 2 years rates will be 4-5% + your lender's fee. Starting paying the extra into a separate bank account now as much as possible so that when the rates do rise, you have a slush fund to support it without being too stretched.

Basically, calculate your cost of living right now (food, taxis, bus, petrol, clothes, everything) and cut expenditure by 10-15% should cover you.
 

McEavelli

Active member
Joined
Dec 10, 2008
Messages
295
At the moment that's like asking what happens if Ireland sinks. There is no point in asking questions to which the answer is oblivion.
 

Seos

Active member
Joined
Nov 19, 2005
Messages
153
no one even viewing this thread? have i put it in the wrong forum?
It's only been 44 minutes and it's a Saturday afternoon.

Sorry in advance if this topic is already discussed.
I was working on my household budget..which is always a year or so in advance and didnt know what to predict my mortgage payments any further than the next few months

So I was just thinking about when the ECB rates will start rising again and does anyone have any predictions?

it looks like a cut is on the cards this week and then assuming no more cuts..as soon as say Germany show recovery signs will they rise again and when do you think it'll be? end of 2009 ..first qtr of 2010??

if Ireland is still in a bad way at the time, with income tax and whatever other taxes in the December budget being targeted and then the rates rise its going to leave a lot of mortgage holders in trouble.

anyone got any thoughts or am I worrying needlessly as who knows whats down the line!

thanks
The rise should be well after the first signs of recovery because ECB policy is to deal with inflation, it should be only be after eurozone inflation goes above 3% or looks to be going above 3% that rises will start. (2% is their target inflation rate)
I don't have any idea when that will happen but probably after 2010.
 

louball

Member
Joined
May 24, 2007
Messages
8
thanks

jimmyfour..i am not worrying about me personally as i over estimate everything on my budget just thinking of people going to be stuck next year, will it increase repossesions say?

and McEavelli...lol thanks
 

louball

Member
Joined
May 24, 2007
Messages
8
sorry seos..i went away from computer and it still said 0 views but after i posted that it jumped to 30 so i probably hadn't refreshed the page properly and just thought it was odd that there was no views..

as usual i was jumping the gun :)
 

Seos

Active member
Joined
Nov 19, 2005
Messages
153
sorry seos..i went away from computer and it still said 0 views but after i posted that it jumped to 30 so i probably hadn't refreshed the page properly and just thought it was odd that there was no views..

as usual i was jumping the gun :)
No problem, it was meant to be in a "relax" type of tone, rather than giving out or anything.

No you are not worrying needlessly. Assume that within 2 years rates will be 4-5% + your lender's fee. Starting paying the extra into a separate bank account now as much as possible so that when the rates do rise, you have a slush fund to support it without being too stretched.

Basically, calculate your cost of living right now (food, taxis, bus, petrol, clothes, everything) and cut expenditure by 10-15% should cover you.
While I don't think rates will have risen to anywhere near 4-5% I fully agree with your advice.
 

Middleaged

Active member
Joined
Jul 30, 2008
Messages
219
Well be certain of one thing, they will rise, when, if we knew that we'd make a few bob.

My view, 25bps reduction again next week and that's it, due to the severity of this recession all increases will be of 25bps starting in Q3 2010.

I am making one feckin large assumption here, and its inflation stays below 2.5%, anything above this and they'll move more quickly.

Save what you can, or pay down principle.
 
Last edited:

Seos

Active member
Joined
Nov 19, 2005
Messages
153
I am making one feckin large assumption here, and its inflation stays below 2.5%, anything above this and they'll move more quickly.
Yes, if you want to know what the ECB will do keep looking at the predicted eurozone inflation rate, this is the only thing that the ECB is meant to consider and their aim is 2%. So long as they predict inflation below 2% there will not be a rise at all.
 

adamirer

Well-known member
Joined
May 16, 2007
Messages
454
Its all guess work. Rates stayed at close to 2% ECB from 2003-2006... it'll remain low for a while. Fix after the first rate rise...
 

Middleaged

Active member
Joined
Jul 30, 2008
Messages
219
Yes, if you want to know what the ECB will do keep looking at the predicted eurozone inflation rate, this is the only thing that the ECB is meant to consider and their aim is 2%. So long as they predict inflation below 2% there will not be a rise at all.
I think that they are thinking that 2% is too narrow, a little inflation is needed otherwise business wouldn't be, well be in business.

No doubt we'll find out
 

Question R24U

Active member
Joined
Oct 5, 2008
Messages
269
I think we are only in a predepression recession. The next steps, i think are:
1. Another interest rate fall.
2. Government fails to slash public sector payroll bill and social welfare.
3. Only four billion taken out in next budget.
4. Very early signs of recovery in US at start of next year.
5. The obama stimulus package leads to inflation.

6 the fed raises interest rates.
7 the euro does the same.
8 while rest of europe start to recover in mid 2010 we are still bleeding.
9. Interest rate cycle of rises to counter german fears of inflation.
10. Already stretched householders really begin to default.
11. Investors return to nama are well below expectations as off-shores, wives, company law,uk bancruptcy laws are used to avoid guarantees etc
12. No one lends to ireland except at exorbitant rates.
(this is my reading of the next 2 years, but i am open to correction but with a deficit of 25bn plus half a million unemployed and a property bust and eager east europeans wanting our multi nationals - it is not going to be pretty).
Advice;
Cut your spending now down to the bare minimal. Now. I mean everything)
Save your money in well backed products but easily accessible eg post office for the moment eg prize bonds or short term anglo irish. (if you have to buy any present for the wife make it gold jewellery this should rise in value),
 

DerekB

New member
Joined
May 2, 2009
Messages
3
Website
www.derekbrawn.com
Interest rate forecasts is not guesswork - just follow the professional money managers wagers on interest rate futures - follow the money. Professional investors (Pension Fund, Life Assurance, Investment Trusts as well as Commercial Banks) bet on interest rate movements every day using Euribor futures. These are the same guys who manage your pension, your life insurance, endowments, car insurance premiums as well as your current & deposit a/c money. They cannot afford to GUESS interest rate movements or take unnecessary interest rate risks.

ECB refinancing rate (read Base Rate) will be back to 3% by 2012 for sure based on existing bets as of April 30. PLease see my website for current bets out to March 2015:

Irish Property

Click on second Tab panel for 'ECB Rate Projections'.

EUR 3 Trillion (that's 3 + twelve zeros) of notional bets (each Euribor contract = EUR 1 million) has been bet on where these ECB rates will be over coming years.

It may sound complicated but it's not trust me, I worked for years in Intl Interest Rate & Bond markets in NY & London. Look at the chart and then look at current interest rate/mortgage (fixed-rate) offers.
 

adamirer

Well-known member
Joined
May 16, 2007
Messages
454
Interest rate forecasts is not guesswork - just follow the professional money managers wagers on interest rate futures - follow the money. Professional investors (Pension Fund, Life Assurance, Investment Trusts as well as Commercial Banks) bet on interest rate movements every day using Euribor futures. These are the same guys who manage your pension, your life insurance, endowments, car insurance premiums as well as your current & deposit a/c money. They cannot afford to GUESS interest rate movements or take unnecessary interest rate risks.

ECB refinancing rate (read Base Rate) will be back to 3% by 2012 for sure based on existing bets as of April 30. PLease see my website for current bets out to March 2015:

Irish Property

Click on second Tab panel for 'ECB Rate Projections'.

EUR 3 Trillion (that's 3 + twelve zeros) of notional bets (each Euribor contract = EUR 1 million) has been bet on where these ECB rates will be over coming years.

It may sound complicated but it's not trust me, I worked for years in Intl Interest Rate & Bond markets in NY & London. Look at the chart and then look at current interest rate/mortgage (fixed-rate) offers.
It is this far out. Don't tell me, 12 months ago when rates were climbing towards 5% you saw them this low a year later? C'mon, no one did. Its guess work, be it informed or not. You cant predict something nwith that many variables and at such global whim.
 

Cael

Well-known member
Joined
Jun 19, 2006
Messages
13,343
Interest rate forecasts is not guesswork - just follow the professional money managers wagers on interest rate futures - follow the money. Professional investors (Pension Fund, Life Assurance, Investment Trusts as well as Commercial Banks) bet on interest rate movements every day using Euribor futures. These are the same guys who manage your pension, your life insurance, endowments, car insurance premiums as well as your current & deposit a/c money. They cannot afford to GUESS interest rate movements or take unnecessary interest rate risks.

ECB refinancing rate (read Base Rate) will be back to 3% by 2012 for sure based on existing bets as of April 30. PLease see my website for current bets out to March 2015:

Irish Property

Click on second Tab panel for 'ECB Rate Projections'.

EUR 3 Trillion (that's 3 + twelve zeros) of notional bets (each Euribor contract = EUR 1 million) has been bet on where these ECB rates will be over coming years.

It may sound complicated but it's not trust me, I worked for years in Intl Interest Rate & Bond markets in NY & London. Look at the chart and then look at current interest rate/mortgage (fixed-rate) offers.
Thanks for that useful post Derek. By the way you did great on the Late Late, but one question I wanted to ask you, isnt it true that Ireland actually has a lower floorspace to population ratio than the rest of Europe?
 

Seos

Active member
Joined
Nov 19, 2005
Messages
153
Interest rate forecasts is not guesswork - just follow the professional money managers wagers on interest rate futures - follow the money. Professional investors (Pension Fund, Life Assurance, Investment Trusts as well as Commercial Banks) bet on interest rate movements every day using Euribor futures. These are the same guys who manage your pension, your life insurance, endowments, car insurance premiums as well as your current & deposit a/c money. They cannot afford to GUESS interest rate movements or take unnecessary interest rate risks.

ECB refinancing rate (read Base Rate) will be back to 3% by 2012 for sure based on existing bets as of April 30. PLease see my website for current bets out to March 2015:

Irish Property

Click on second Tab panel for 'ECB Rate Projections'.

EUR 3 Trillion (that's 3 + twelve zeros) of notional bets (each Euribor contract = EUR 1 million) has been bet on where these ECB rates will be over coming years.

It may sound complicated but it's not trust me, I worked for years in Intl Interest Rate & Bond markets in NY & London. Look at the chart and then look at current interest rate/mortgage (fixed-rate) offers.
How good is that at predicting turning points?
 

kerrynorth

Well-known member
Joined
Oct 5, 2005
Messages
1,525
Sorry in advance if this topic is already discussed.
I was working on my household budget..which is always a year or so in advance and didnt know what to predict my mortgage payments any further than the next few months

So I was just thinking about when the ECB rates will start rising again and does anyone have any predictions?

it looks like a cut is on the cards this week and then assuming no more cuts..as soon as say Germany show recovery signs will they rise again and when do you think it'll be? end of 2009 ..first qtr of 2010??

if Ireland is still in a bad way at the time, with income tax and whatever other taxes in the December budget being targeted and then the rates rise its going to leave a lot of mortgage holders in trouble.

anyone got any thoughts or am I worrying needlessly as who knows whats down the line!

thanks
I cannot see interest rates rising through the rest of 09 or 2010. Fixing may be a good option at the backend of 2010, but certainly not before. The Eurozone may record further negative growth in 2010 and it will take a sudden spike in commodity prices for the ECB to raise interest rates which are not in prospect for the foreseeable future.
 
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