Foreign Currency Mortgages
January 3rd, 2007 by Ian
You know a market is big when something as widely used as mortgages are playing it too. HSBC has a mortgage that lets you pay in different currencies. It looks like it’s only for UK residents currently, as there is probably much more demand than the United States or mainland Europe.
One interesting aspect is the availability to use the different currencies’ interest rates. With the euro having a lower central bank rate than the sterling (3.5% vs 5%) you can get a lower rate by using the euro. The Canadian Dollar at 4.25% is also lower than the sterling.
It’s a good marketing ploy, but in reality you could easily offset the risk yourself by opening up a simple leveraged spot forex trading account. In this case you’d have to be more handy with numbers and feel comfortable opening and closing your own trades, but it might be worth it if this concept is something that interests you. You would get the advantage of the interest rate by using the carry trade and could completely offset the risk with a few thousand dollars by using margin.
