Will the EX Rate ever go back up?

Firstly to Marksfish, check documentation on lending as for existing loans a  lender cannot not lower their rate, unless it has what is known as a collar on it (ie cap and collar-cannot go higher than the cap nor lower than the collar) most will not have these as they simply didnt expect rates to go so low- eg: my wife has one of her properties at 0.75% tracker BELOW the base rate, and yes it means if it goes to 0% they will have to credit us as an overpayment!

Roberto

whilst Japan has had a 0% rate for sometime they export shedloads so it works in their favour, as you rightly mention we dont!

as for USA they are still in huge deficit and big trouble, the government in both these countries are likely to simply have to introduce "more money" into circulation via further governement borrowings and persuading investors to ignore the likes of gilts and government bonds.

Financial Advice at present is simple- batten up the hatches and survive the next 12-15 months!

Good Luck and a Happy Healthy and hopefully Wealthy New Year-ps its snowig in London and apparently going to be -10 in the midlands tonite!

Many UK banks have already said that they have a lower limit on how low their rates will go, and as I said, Nationwide's is 3%. They allowed the rate to drop to its current due to "extraordinary circumstances" but hav stated they will not lower them any further to protect savers. My Wife works at Barclays and they too have a lower limit that they will more than likely invoke if the 1% further drop I heard about yesterday comes into force. Thus as I mentioned before, how does lowering the interest rate further help homeowners when the rate cuts won't be passed on? Most people anyway wont save what they aren't paying any more and when the inevitable rate rises come back in a few years, there could be even more repos as customers cry foul because they have become used to spending the extra.

Mark

Marksfish

apologies i was referring to existing loans not new one,s, yes you are correct as mentione din an earlier posting lenders are making more than ever because they are not passing the cuts on.

I have thought about the continuation of lowering interest rates to below what banks will lend at and I came up with the following hypothesis.

Don't forget that the lowering of Interest rates is an attempt to lower the Libor rate, thus Banks will be able to lend to each other at lower rates, thus it is an attempt to stimulate liquidity.

Also, with Mortgage Interest rates higher than the Libor rate, Banks will also make money thus encouraging them to lend to more borrowers, thus stimulating the Housing Market.

Further, with lending Interest rates set higher than Libor rates, savings interest rates can be held at a decent level allowing the Banks to make money from Investors savings.

Sounds like a good ploy to me. 

Hmm! Far from being parity by the New Year, the ex-rate never went below 1.022 and hovered around 1.045 for two days.

Today it is already up 0.023 at 1.069

Technoape

whilst no disagreeing with your prognosis it seems you have fallen foul in one major area.............you have applied a modicum of commonsense!

I have stated previously that the main problem is not anything to do with residential mortgages but with the inability of mainstream banks to lend on a commercial basis, thus not only restricting deals to cash buyers but causing a terrible knock on effect.

I have had to turn away in excess of £40m of commercial lending deals in the last 4 months a recent example being

client wanted to purchase at auction for a commercial unit with a blue chip tenant and good rental income, he was prepared to put down 50% , the person i deal with at the lenders is very high up the tree and verbally agreed,

rate of base plus 2.25%-all ok so far

but the credit team insist that as rates will not be low for ever that one works on a "serviceability"-read affordability repayment system of 8% in this case it meant that they would only lend the client 42%!

So where as banks are making more money now than at any time previously they are being selective about who they lend to and it will be the minority not the majority.

One  possible advantage of the low ex. rate (£/E) is the value of your property in Spain in £.

If you manage to sell your property for 100,000 euros they will equate to  £100,000  today while a year ago that may have only fetched  £75,000. Just a thought. Always look on the bright side.

Happy new year

A valid point however with both the UK economic climate and the mass of available property in Spain -much at 50% below value it is unlikely a queue will be forming!

and at present rate is 1.08 but expect it to plummet again on thursday when a decision is made by the BOE if they drop rates which is expected then it will drop if they keep rates at the same then no one is expecting that then you may well see the ex rate go back in to double figures again

The expected 0.75% - 1% cut is probably already factored in to the current rate, so there may be little change on Thursday, especially as the euro weakened today as well, which is why the rate went up a bit.

(BTW, I don't have a clue what I'm talking about really - but neither do the "experts", so what the heck?!)

nor do i roberto but we can hope

Hmm!

It's up to 1.093 and it's only 10.21am

Will we see double figures after the decimal point before the day is out?

And now 1.098

Euro weakens on expected Eurozone Rate Cut see          http://newsvote.bbc.co.uk/1/hi/business/7813435.stm

Double figures

1.10

I'll have to take your word for it, I daren't look .

No Markfish,

DON'T you dare look!!!!!

lol

I'll look for you, because we both know what your Mrs says when you do, and we don't want that now do we.

1.11 now

Currently sat at 1.127

Will be interesting to see what happens on Monday.

is that when the ecb make their decision