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MayoMark View Drop Down
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The NEW angrier Freewheeler

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    Posted: 21 Jun 2022 at 6:05pm
With pressures of rising costs and constant talk now of a looming recession, it feels inevitable and is a little bit scary to be honest. What does a normal Joe soap do? Save and hope for the best?

Although I'm aware that doing that will actually add fuel to the fire
They finally did it man... They killed my f**kin' car...
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Originally posted by MayoMark MayoMark wrote:

With pressures of rising costs and constant talk now of a looming recession, it feels inevitable and is a little bit scary to be honest. What does a normal Joe soap do? Save and hope for the best?

Although I'm aware that doing that will actually add fuel to the fire
Not all recessions are equal, the one in 08 that we all remembered were all about house prices crashing, negative equity and job losses, but not all are. In truth, we have a recesion (back to back quarters of negative growth) every 7 years or so so we're well overdue, but that doesn't mean it'll be another one of the "house price drops and job cuts everywhere" recessions.

In truth, there's not the conditions for house prices to drop, we're well understocked.

Similarly there's not the conditions for job cuts, the opposite is true if anything, everyone's hiring right now.

So the only problem is the rising cost of living, without the rise in our income. 

There's two main drivers of rising costs at at present,
1. Supply chains are f**ked as there's not enough workers to unload ships, drive trucks etc.
2. Energy costs are too high, increasing cost of sourcing things, but oil is down 10% this week, gas down 20% this week, so that'll kick in and help eventually. 

Our income is what most of us can control more believe it or not, honeslty, best thing Average Joe can do, move job. There's plenty available, and it's been shown as the only way of getting your value at work. Even if you can apply for and get a job, show the offer to current employer, you'll get the raise if they want you. It'll cost them more to replace you.
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The NEW angrier Freewheeler

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Yeah the housing market isn't as badly exposed, or the banks, as 2008.

But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?

Locking into a fixed mortgage is a no brainer in my view. 
They finally did it man... They killed my f**kin' car...
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Panic is always a strong option Clap
l hear you are a racist now, father ?
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Originally posted by MayoMark MayoMark wrote:

Yeah the housing market isn't as badly exposed, or the banks, as 2008.

But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?

Locking into a fixed mortgage is a no brainer in my view. 
It's a hard one Mark knowing what to do as it is a gamble . Banks Hedge their bets by giving you a 5 year deal as it were , now if I had 10 years on my mortgage I would fix but who knows .
Lansdowne Road debut aged 52 and 201 days .
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Liam Brady
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Fix your mortgage and cut up the credit card.
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Originally posted by MayoMark MayoMark wrote:

Yeah the housing market isn't as badly exposed, or the banks, as 2008.

But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?

Locking into a fixed mortgage is a no brainer in my view. 
Yeah i'm going to fix, going on a 2.15% rate for 5 years. The Irish banks aren't as badly off as others tho for mortgage rates. Banks like Avant borrow money for their mortgages, so their rates will go up, BOI/AIB use savings accounts for mortgages so they're not as exposed to the rate changes. I don't expect our mortgage rates to change too much.
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Fixed rate mortgage gives you a guarantee of what you’ll pay.  Variable can go as high as banks want and next few years are likely to keep going up .  If can get a fixed at a reasonable mark up on the current variable rate is a no brainer for me. 

I’m 4 years into a 10 year fixed start to the mortgage.  means we overpaid by about 3/4 of a percent compared to a variable for the 4 years so far but likely to be underpaying for the next few.  Certainty for planning purposes alone is worth it even if ends up costing a little more. 
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Ray Houghton
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Originally posted by MayoMark MayoMark wrote:


But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?


What the hell else can you do but sleep, work, sh*t, sleep, work, sh*t like every other week. 

If you wanted to be extra cautious with inflation and cost of living assume you are 10% poorer than last year. 
It would damage this forums' reputation
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Originally posted by Shedite Shedite wrote:

Originally posted by MayoMark MayoMark wrote:

Yeah the housing market isn't as badly exposed, or the banks, as 2008.

But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?

Locking into a fixed mortgage is a no brainer in my view. 
Yeah i'm going to fix, going on a 2.15% rate for 5 years. The Irish banks aren't as badly off as others tho for mortgage rates. Banks like Avant borrow money for their mortgages, so their rates will go up, BOI/AIB use savings accounts for mortgages so they're not as exposed to the rate changes. I don't expect our mortgage rates to change too much.

Avant is owned by Bankinter, they can sustain their rates the same way the others can, if the want. They may chose not to. 

We're due for renewal on Dec, wish we'd paid the break charge and locked in for 15 years at 2.25 now. Should get 1.95 for four years, just need to hope it holds a bit longer! 
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Liam Brady
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Another covid lockdown will quickly get rid of inflation, cases currently rising, I wonder.....
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Originally posted by Shedite Shedite wrote:

Originally posted by MayoMark MayoMark wrote:

Yeah the housing market isn't as badly exposed, or the banks, as 2008.

But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?

Locking into a fixed mortgage is a no brainer in my view. 
Yeah i'm going to fix, going on a 2.15% rate for 5 years. The Irish banks aren't as badly off as others tho for mortgage rates. Banks like Avant borrow money for their mortgages, so their rates will go up, BOI/AIB use savings accounts for mortgages so they're not as exposed to the rate changes. I don't expect our mortgage rates to change too much.
 
Not true. Banks have to keep a certain reserve under regulation to cover bad debts but money is borrowed from international markets for most lending. Outside of personal banking, if you ever see business or corporate rates they are quoted as Cost of Funds (what the bank borrows at) plus a margin.
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Jack Charlton
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Originally posted by MayoMark MayoMark wrote:

Yeah the housing market isn't as badly exposed, or the banks, as 2008.

But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?

Locking into a fixed mortgage is a no brainer in my view. 
 
The goal behind increasing interest rates is to combat rising inflation. The idea is it becomes more appealing for people to save as there is a greater return instead of continuing to spend like now knowing €1 today is only going to be worth €0.94 cent in a year so might as well spend it now. Obviously interest rates are still too low to encourage saving but if you think back 15 years or so pre financial crisis you could get 5% on short term deposits and we had the SSIA too to get people to save and curtail spending.
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Jack Charlton
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Originally posted by nvidic nvidic wrote:

Originally posted by Shedite Shedite wrote:

Originally posted by MayoMark MayoMark wrote:

Yeah the housing market isn't as badly exposed, or the banks, as 2008.

But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?

Locking into a fixed mortgage is a no brainer in my view. 
Yeah i'm going to fix, going on a 2.15% rate for 5 years. The Irish banks aren't as badly off as others tho for mortgage rates. Banks like Avant borrow money for their mortgages, so their rates will go up, BOI/AIB use savings accounts for mortgages so they're not as exposed to the rate changes. I don't expect our mortgage rates to change too much.

Avant is owned by Bankinter, they can sustain their rates the same way the others can, if the want. They may chose not to. 

We're due for renewal on Dec, wish we'd paid the break charge and locked in for 15 years at 2.25 now. Should get 1.95 for four years, just need to hope it holds a bit longer! 

You've missed the boat on that I'm afraid. Avant are moving their 1.95% to 2.15% on 16th July this year
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Originally posted by sausy sausy wrote:

Originally posted by Shedite Shedite wrote:

Originally posted by MayoMark MayoMark wrote:

Yeah the housing market isn't as badly exposed, or the banks, as 2008.

But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?

Locking into a fixed mortgage is a no brainer in my view. 
Yeah i'm going to fix, going on a 2.15% rate for 5 years. The Irish banks aren't as badly off as others tho for mortgage rates. Banks like Avant borrow money for their mortgages, so their rates will go up, BOI/AIB use savings accounts for mortgages so they're not as exposed to the rate changes. I don't expect our mortgage rates to change too much.
 
Not true. Banks have to keep a certain reserve under regulation to cover bad debts but money is borrowed from international markets for most lending. Outside of personal banking, if you ever see business or corporate rates they are quoted as Cost of Funds (what the bank borrows at) plus a margin.
I think it's personal mortgages most on here are looking at, AIB/BOI etc would offer them from deposits. Offer Person A 0.1% interest to mind their money on deposit, offer Person B that same money as a loan at 2% = 1.9% profit
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surely the profit is 1.9% minus all the overheads such as wages and rents for buildings and heating and electricity costs etc etc.  

Very simplistic equation you have there. 
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Originally posted by Shedite Shedite wrote:

Originally posted by sausy sausy wrote:

Originally posted by Shedite Shedite wrote:

Originally posted by MayoMark MayoMark wrote:

Yeah the housing market isn't as badly exposed, or the banks, as 2008.

But let's assume you're in a decent job etc and there is a looming recession, what's a man to do? Just save a few bob and hope for the best?

Locking into a fixed mortgage is a no brainer in my view. 
Yeah i'm going to fix, going on a 2.15% rate for 5 years. The Irish banks aren't as badly off as others tho for mortgage rates. Banks like Avant borrow money for their mortgages, so their rates will go up, BOI/AIB use savings accounts for mortgages so they're not as exposed to the rate changes. I don't expect our mortgage rates to change too much.
 
Not true. Banks have to keep a certain reserve under regulation to cover bad debts but money is borrowed from international markets for most lending. Outside of personal banking, if you ever see business or corporate rates they are quoted as Cost of Funds (what the bank borrows at) plus a margin.
I think it's personal mortgages most on here are looking at, AIB/BOI etc would offer them from deposits. Offer Person A 0.1% interest to mind their money on deposit, offer Person B that same money as a loan at 2% = 1.9% profit
 
That's a basic model of how banking worked a long long time ago and might better describe the likes of credit unions etc. In reality Banks borrow at a certain rate and put a margin on it. All loans are monitored and given a probability of default rating, the worse the rating the more cash reserves have to be kept to ensure sustainability of the whole system.
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Roy Keane
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Strange how a thread on The Economy has been dominated by houses. 
I think this is a uniquely Irish obsession. 
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