Spanish and French Interest Rates to Fall by 1 percent?

Euro Exchange Rate Outlook : The IFO Nov index of the business climate fell more than forecast to 85.8 from 90.2 in Oct, the lowest in nearly 16 years (Feb 1993). The “current assessment” fell to 94.8 from 99.9 in Oct, while "business expectations" fell to 77.6 from 81.4 in Oct. IFO’s Nerb said he doesn’t expect a rapid increase in unemployment, although there will be some, and he expects the ECB to interest cut rates by 100 bp.

In economic data, eurozone new industrial orders for Sept fell 3.9% m/m and 1.1% y/y.

On Friday, the flash estimate of manufacturing PMI fell to 36.2 in November from 41.1 in Oct and an estimate of 40.5. Today Bini-Smaghi said the eurozone was holding up pretty well and the new euro exchange rates level was pretty good for exports.

We don’t quite know what to make of such remarks.

Barbara Rockefeller
Foreign Exchange Trading
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Spanish Mortgage Rates to fall?

Euro Exchange Rate Outlook : It’s not clear that the ECB is on board with the themes of the day (deleveraging, deflation and downsizing). Yesterday Trichet said "I do not exclude that we will continue to decrease euro interest rates, if we have confirmation of the alleviation of risks to price stability." In other wrods, he wants everybody to think inflation is still the top priority and the bank needs proof it is falling before it will cut rates. Is now the right time to be trumpeting price stability as the only priority? The WSJ cites several foreign exchange analysts who say the ECB is moving too slowly. The Fed and Bank of England have moved much faster ,which is deemed appropriate for recession conditions. But the ECB points out that with the interbank market seized up, a cut doesn’t have much effect on activity. Still, the bank is expected to cut the first week of December by 50 bp to 2.75% and by as much as 75 bp by end-March.

Pounds to Euros currently 1.1950 to buy euros

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Barbara Rockefeller
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Need a Spanish Mortgage or Maybe a French Equity Release - Contact IMSFX +207 183 2790

Stark saying things are worse than we think in Europe

Pound Sterling is fascinating these days, first rising yesterday morning from 1.5598 at midnight to 1.6097 around noon, or 499 points in 12 hours - but then falling back to 1.5747 in the next 12 hours, only to bounce to 1.6047 again so far today.

What is causing these wild currency swings?

The reason seems to be that really bad data releases (see below) are inspiring forecasts of bigger-than-expected rate cuts tomorrow, maybe as much as 100 bp.

These days a big fat interest rate cut is currency-supportive (see Australian Dollar). Well, with Stark saying things are worse than we think in Europe, why isn’t the euro exchange rate getting the same boost? Possibly because nobody thinks the ECB would do anything as outrageous as surprise the market with a European interest rate cut of more than 50 bp tomorrow, and maybe not even that.

Maybe if the ECB cuts interest rates by 1pc we may see Spanish and French banks willing to issue spanish and french mortgages

Buy For Now

Barbara Rockefeller
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Need a french mortgages or just need to buy euros contact IMS foreign Exchange

Spanish Property prices

Spanish Property prices

Since 1995 Spanish House Prices rose 200% in nominal terms (i.e. before inflation is factored in), and 110% in real terms (after inflation). When the increase is compared to other economic variables, like wages and rents, there is a strong argument that houses have become significantly overvalued… but by how much?

When you compare the ratios of Spanish House Prices to average wages, and house prices to rental costs, their long-run averages suggest houses could be 50% overvalued.

A look at the house prices to household income ratio suggests house prices may be overvalued by 30%.

Capital Economics believes the most important factor has been the fall in nominal and real interest rates since Spain joined the Euro. At present the average mortgage rate is around 5.5%, half its mid-1990s level. The mortgage repayments costs to earnings ratio suggests that house prices are overvalued by less than 20%.

Capital Economics have pencilled in a 12% fall by the end of 2009 and a further 3% in 2010. However they accept that there clearly is a risk that prices could fall by more than their forecast.
The economists believe commercial property is not dramatically overvalued - it would only need fall by 8% for yields to return to their 2001 rates. The economic downturn should only trigger a “fairly modest fall” in commercial property prices over the next few years.

Buy Euros News Today and Last Week

Hi All,

What a week in for those needing to Buy Euros. First the single currency rallied to 1.2660 and than sold off before the ECB' Interest Rate Hike to 4.25 percent. The Currency Today is trading at 1.2635 again and future outlook is suggesting a return of 1.3000.

Here are a few of the Currency News Story's we covered this week

Credit Crunch and Higher Food and Oil Prices set Marks & Spencer shares spiralling as retailer issues profits warning

UK House Prices Slump as First Home Buyers Disappear

Traders Buy Oil and Sell US Shares

Europe raises interest rates to 7-year high

UK house prices Fall Again - Ninth Straight Month

Hopefully we have a little more to cheer about especially in the Spanish Mortgage and Spanish Property Market

Spanish mortgage update

Mortgages in Spain are becoming more increasingly difficult to obtain as the lenders tighten their belts.

As in the UK; the Spanish lenders are constantly changing their product ranges and increasing fee’s making it a mine field for non-residents when trying to source the most suitable product(s).

AIP’s that usually take 48 hours are now taking around 4 to 5 days! And the endless list of the documents they require can be very frustrating. These however are all pitfalls that will need to be overcome when your property is due for completion.

Interest rates are also at the highest in over 5 years in Spain with the current annual EURIBOR rate at 5.5%, the banks will then add their margin of lending to this to give you your actual mortgage rate, this can be anywhere from +0.75% to +1.75% depending on the product that you take.

The key to obtaining your Spanish Mortgage is to be Patient and supply the information requested by the bank or your broker, there are no shortcuts like self cert mortgages anymore (although if you are only looking for a low LTV then some banks will offer and minimum document policy).

Using a broker although may cost a little more will take away many of the headaches as they will have constant updates and be able to feed the latest & most up to date information to you the client. Key Mortgages S.L is one such broker with access to all the big lenders in Spain; they do not charge any fee until they have actually had your loan approved! So you know you are not wasting any time or money.

For free help and advice please email info@keymortgages.net & quote IMS Foreign Exchange.