remorgage on the horizon..lets go Japanese!!!

[red army]

All,

I am presently on a rate of 4.39 which is expiring at the end of the year and being a trader realise where LIBOR is and what the morgage rates will be year end. I can't see a decent deal below 5.5-6% and may need to pay higher.
My question is that i was thinking of investigating the opportunity of "going japanese". Borrowing the money from a japanese bank at a low interest rate (0.5%) and then i will have lower re-payments. Bit of a carry trade scenario. I understand the exchange rate risk and haven't really researched this further. I obviously will be rigerous. Have you heard of anything like this, do you think it can be done?????
Comments welcome..
cheers

 

[vergis92]

All,

I am presently on a rate of 4.39 which is expiring at the end of the year and being a trader realise where LIBOR is and what the morgage rates will be year end. I can't see a decent deal below 5.5-6% and may need to pay higher.
My question is that i was thinking of investigating the opportunity of "going japanese". Borrowing the money from a japanese bank at a low interest rate (0.5%) and then i will have lower re-payments. Bit of a carry trade scenario. I understand the exchange rate risk and haven't really researched this further. I obviously will be rigerous. Have you heard of anything like this, do you think it can be done?????
Comments welcome..
cheers

Hi, I'm into real estate here in Greece and I've been thinking exactly the same thing
lately, one high street bank has long been offering mortgages on swiss frank but
I was too thinking about jap yen and other currencies, they are called 'overseas'
mortgages or multi currency mortgages, google these terms and you will see some
good advisors websites,

the idea is to find a currency that over a five year period (so as to avoid early repayment penaly fee that most these mortgages have, usually 5 years min)
will decline against the national currency of the country the property is in and/or
have a lower base rate, after five years you remortgage again based on your new
currency beliefs

Actually I'm thinking of finding the right bank and currency advisor and use it
in promoting our properties that way, it's not use borrowing in Euros when you want
to make money out of a property but the client has to also understand the risks involved
in case this 5 year plan doesn't pan out,

I need to investigate multicurrency mortgages and pairs that can give a lower total base rate than euro but also look into inverse correlation among them, it may be possible
to overall reduce risk to a minimum and get much lower rates

 

[vergis92]

Multi Foreign Currency Mortgage Specialist - The Mortgage Explorer UK

Foreign Currency Mortgages

 

[red army]

Multi Foreign Currency Mortgage Specialist - The Mortgage Explorer UK

Foreign Currency Mortgages

cheers vergis 92 i'll do some research on this.........

 

[Mr. Charts]

Just to illustrate large currency variations over a short period.....
Richard

 

[rawrschach]

You could hedge against the currency fluctuation - could be quite interesting.

 

[red army]

You could hedge against the currency fluctuation - could be quite interesting.

There has been alot of talk about euro/yen being very bearish now as investers are ploughing into the yen as a safe heaven. This i think will efect sterling/yen in the same fashion, ie sell sterling buy yen so that will be bearish aswell.
This trade will not help my "carry trade" type morgage so how could i hedge it????

 

[rawrschach]

feck, I dunno anything about hedging, was just thinking out loud tbh

 

[red army]

feck, I dunno anything about hedging, was just thinking out loud tbh

no worries,maybe you could lock in a minimum variant on the exchange rate fluctuations to minimise your risk there. Gonna have a chat with some peeps on Monday to see what the score is......

 

[options]

no worries,maybe you could lock in a minimum variant on the exchange rate fluctuations to minimise your risk there. Gonna have a chat with some peeps on Monday to see what the score is......

Let us know how it goes please.

Theoretically it looks promising.

 

[red army]

Let us know how it goes please.

Theoretically it looks promising.

will do...........

 

[TWI]

Personally I would not want to take a large yen short from here. I do not think you can hedge the currency exposure if doing this type of mortgage and still come out on top as the IR differential is priced into the forwards. The only way to win is to take a long term FX view. It worked for many years in the Yen but there are comapanies who offer multi-currency mortgages and actively manage them for you through many different currencies as they read it which may be the better bet. Historically these funds have worked well despite their fees.

 

[Hoggums]

What you need is a Power Reverse Swap. (it's effectively a way to convert your debt to another ccy and pay their interest rates). However, just pray the exhange or interest rates don't change if you take this out otherwise you're screwed.

 

[red army]

What you need is a Power Reverse Swap. (it's effectively a way to convert your debt to another ccy and pay their interest rates). However, just pray the exhange or interest rates don't change if you take this out otherwise you're screwed.

Wasn't able to do much research today as the mkts were crazey. Cheers for your input hoggums, i'll definately take a look into that. Will currency brokers understand this concept???

 

[red army]

Multi Foreign Currency Mortgage Specialist - The Mortgage Explorer UK

Foreign Currency Mortgages

I've been trying to hold of the guys. The 0800 number for the 1st company is invalid and the second lot don't want to return my calls. Shame i did try but i think this idea is probably too risky any ways.....