[Ginnser]

Hi Everyone

I am considering remortgaging a few of my properties back in th UK to either a Swiss Franc (CHF) or Jap Yen mortgage for a better rate.

I understand RBS offer these types of mortgages.

Does anyone in HK have any experience of these type of foriegn currency mortgages?

Regards

[freeier]

u expect the GBP to appreciate against CHF or JPY in the next few years ?! hmmm

[Ginnser]

Hi Freeier

amongst other bit i read this

http://www.moneyweek.com/file/18591/...-mortgage.html

I have been thinking of it for some time

I understand the RBS allows currency swaps throughout the year

Thoughts?

[freeier]

there are several factors to consider.
as a laymen, u'd have difficulties actually interpreting the trend of any foreign currency movement.
let's say you do a CHF mortage at 3.5% with the GBP to CHF rate at 2.5CHF to the Pound.
when CHF rise to 2.4CHF to the pound, maybe within the year, would you panic and swap it back into pound ? once you do that you'd incur at least a 10 or 20bps charge on the basis swap (of cos again it depends on how the bank package it for u, they might absorb it). then next you see it swinging back to 2.5CHF to the pound again.

mathematically it might make sense but you'd have to have a strong believe in how the currency will move and you have to stick to your strong believe for the long term switch to work. else you would be listening and believing every other comment of the economists and incurring additional cost only to be made to look stupid after a few switches.

[back2HK]

Originally Posted by Ginnser

Hi Freeier

amongst other bit i read this

http://www.moneyweek.com/file/18591/...-mortgage.html

I have been thinking of it for some time

I understand the RBS allows currency swaps throughout the year

Thoughts?

It is quite easy to get carried away by the "carry trade"..

Lets say you save 2.5% per annum (or even a lot more by borrowing in Yen) on interest - but you could easily lose 2.5% of capital in a week. I am not saying that funding a sterling asset in CHF or Yen is necessarily a bad idea. But, as Freeier said - you should have a full grip about all the implications, rather than be swayed by an article.