Dollar mortgage ?

[kevinf]

I was reading Eddie Hobbs's 'Loot' last night and he mentioned the possibility of transferring your mortgage from euros to dollars (I think it was a recommended option in the event of an impending downturn in the global economic market).
Does anybody know anything about this ?

Thanks

Kevin

 

[room305]

I've never heard of this. Granted BOI did raise finance through a dollar denominated bond issue (based on existing mortgage debt) and sold it to the Asian market. Don't think it was currency speculation on the bank's part but rather an acknowledgement of the preference among Asian financial institutions for products based in dollars.

Surely this exposes the mortgage holder to even greater risk? As you must now be concerned not just about the value of your house dropping but also the strength of the euro vs dollar.

 

[kevinf]

Hi again.
I read this late last night and didn't peruse it as well as I might have. I'll check on it again tonight, and come back with the exact context tomorrow.

 

[turtle77]

Is the book any good?

 

[conor_mc]

Surely this exposes the mortgage holder to even greater risk? As you must now be concerned not just about the value of your house dropping but also the strength of the euro vs dollar.

It's a huge gamble on the dollar going south in turbulent economic times.

Can't imagine it being suitable for Joe Public who reads Loot for financial advice, it's surely something that you'd need some very, very, very good professional advice on. Not to mention that you'd need to be able to cash out of it and back into EUR very quickly - as in enough cash in the bank to clear the mortgage in total, as opposed to remortgaging in EUR.

I suppose Eddie ecould justify his advice since dollar rate taken out when he was writing the book would have been 1.20 or so, now up to 1.28 ish(?) so a $1000 mortgage repayment now costs you €780 instead of €833.

 

[room305]

I suppose Eddie ecould justify his advice since dollar rate taken out when he was writing the book would have been 1.20 or so, now up to 1.28 ish(?) so a $1000 mortgage repayment now costs you €780 instead of €833.

He could but as you mentioned, is his book really aimed at people who should heed this advice? Weak U.S. economy does not automatically equal weak U.S. dollar. Someone doing this would want to start hedging against a strengthing in the dollar/euro exchange rate which again, is not for the ordinary punter.

Why not switch your Euro mortgage to Sterling either? Sterling is currently strong but perhaps it will weaken. Frankly, currency speculation is a risky business and I don't think Eddie Hobbs should be advising people to engage in gambling on their family home in the hope of obtaining a cheaper mortgage repayment.

You are right conor_mc, this is something that needs professional advice. Eddie Hobbs' advice seems to jump from blindingly obvious to simply appalling with little middle ground.