Remortgaging and refinancing in Spain

After a long absence for the long weekend here in Spain, I'm back. I'm collecting some numbers for bank mortgages as promised - meanwhile, the Irish vote has taken place so let's look at any effects on mortgage payers.

The Irish have had an overwhelming turnout, in effect sending a message that the bailout of the Irish banks is not acceptable as it happened. Of course, a flurry of politicinas have come out to do damage limitation as usual, coming up with statements like "the Irish voters were not part of the agreement to save the banks anyway". The audacity! But anyway, at a more pragmatic level, this might affect us euro-paying home owners because the Irish have in effect declared that they might leave the Eurozone. Unbelievable as it may sound, it may be their only choice - they default on their loans and go back to a devalued Punt. This will drop the Euro FX rate like a rock. In which case all sorts of things might happen, including interventions by the Swiss to prop it up as they always do (in vain). The most likely outcome in my opinion is the ECB raising rates to attract buyers and hold the Euro's value.

Of course all this will be done under the guise of "improving economy means higher prices so we are raising rates", but we will know better. Bear this in mind if you are negotiating interest rates or refinancing. Of course I might be wrong and the ECB prints yet another truckload to save the re-re-re-bankrupt from themselves, but politically I don't think so. Interest rates are the least controversial action that the populace will accept without revolution!