Foreign Currency Margin Calls
Thread Starter
Joined: Jan 2004
Posts: 227
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From: Stratosphere
Foreign Currency Margin Calls
Boys and girls,
Many of us here have property located in countries whose currencies have been and still are (mostly) dropping against the USD/YEN/CHF at a rate that makes ones ears pop.
Many have mortgages on those properties in the strong currencies - not the currency of the country where the proprety is, with the net effect of the mortgage representing a larger portion of the equity in the property. The lending banks, under pressure anyway, then come to the mortgagee, looking to see how the mortgagee wants to increase he level of equity. The main methods of this are:
1. Swap to the currency where the property is -if this can be done. Big losses.
2. Inject cash. Lots of cash. And they may want more again.
3. Provide additional security - other property, etc, with no loans.
Anectdotally, there are lots of us in this boat (leaking money), so my questions are:
1. What are people doing - injecting the cash they have available, borrowing cash? telling the banks they can't comply, etc, etc? I've heard versions of all these.
2. What has been the banks' response?
Serious and considered replies only please -not interested in 'I told you so's.
TM
Many of us here have property located in countries whose currencies have been and still are (mostly) dropping against the USD/YEN/CHF at a rate that makes ones ears pop.
Many have mortgages on those properties in the strong currencies - not the currency of the country where the proprety is, with the net effect of the mortgage representing a larger portion of the equity in the property. The lending banks, under pressure anyway, then come to the mortgagee, looking to see how the mortgagee wants to increase he level of equity. The main methods of this are:
1. Swap to the currency where the property is -if this can be done. Big losses.
2. Inject cash. Lots of cash. And they may want more again.
3. Provide additional security - other property, etc, with no loans.
Anectdotally, there are lots of us in this boat (leaking money), so my questions are:
1. What are people doing - injecting the cash they have available, borrowing cash? telling the banks they can't comply, etc, etc? I've heard versions of all these.
2. What has been the banks' response?
Serious and considered replies only please -not interested in 'I told you so's.
TM
Joined: Aug 2006
Posts: 17
Likes: 0
From: 3rd Rock from Sun
Yes me too.......BUT whot to doo?!?!?
Have told them no can do on more cash etc.
Awiting response. Took them a while to actually get the message though. Have no spare cash because the market are down... dah.
Am dealing with now "not so leading" UK Bank's HKG outfit asked now that they were Gordon Brown owned would that change policy
PM me for further.
Have told them no can do on more cash etc.
Awiting response. Took them a while to actually get the message though. Have no spare cash because the market are down... dah.Am dealing with now "not so leading" UK Bank's HKG outfit asked now that they were Gordon Brown owned would that change policy
PM me for further.
Joined: Mar 2008
Posts: 582
Likes: 1
From: Where I'm pointing...
I don't know if it is too late, but you could look at purchasing futures or options to hedge the FX risk.
Consider it currency insurance, for which you pay a premium, but are protected in these sorts of scenarios.
How much insurance you need, at what price, etc. is something you should speak with a financial planner or FX broker... possibly even the mortgage company you are referring to...
It is not always the answer, but it may help.
Consider it currency insurance, for which you pay a premium, but are protected in these sorts of scenarios.
How much insurance you need, at what price, etc. is something you should speak with a financial planner or FX broker... possibly even the mortgage company you are referring to...
It is not always the answer, but it may help.
Joined: Mar 2006
Posts: 189
Likes: 0
From: Somewhere out there
Hello,
My situation is ok right now re my mortgage at home which is in Euros. It increased incrementally bloody thanks to several interest rate hikes from BRU but that in itself was not the worst of it. Where I felt it most was the increasing dollar amount of money that I needed to send back to cover the mortagage as the dollar, at least 6months ago, showed signs of heading down down down against the Euro, some even suggested a rate of 2:1 in the near future, it had me wondering if I should consider my options in the M.East.
Now the situtation is starting to go the other way and the exchange rates between $/€ are at levels I've not seen since 06'. It just means I have less money to send home every month in dollar terms to cover my euro mortgage.
My point is this, just as I was feeling the pinch earlier but you were not, now I'm feeling it less as you feel it more... perhaps the exchange rates may stabilise somewhat, if you are changing your mortgage currency now you may regret it again later and want to switch back again..
SH.
My situation is ok right now re my mortgage at home which is in Euros. It increased incrementally bloody thanks to several interest rate hikes from BRU but that in itself was not the worst of it. Where I felt it most was the increasing dollar amount of money that I needed to send back to cover the mortagage as the dollar, at least 6months ago, showed signs of heading down down down against the Euro, some even suggested a rate of 2:1 in the near future, it had me wondering if I should consider my options in the M.East.
Now the situtation is starting to go the other way and the exchange rates between $/€ are at levels I've not seen since 06'. It just means I have less money to send home every month in dollar terms to cover my euro mortgage.
My point is this, just as I was feeling the pinch earlier but you were not, now I'm feeling it less as you feel it more... perhaps the exchange rates may stabilise somewhat, if you are changing your mortgage currency now you may regret it again later and want to switch back again..
SH.
