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Old 27.06.2011, 12:38
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Re: Swiss Mortgage Margin Calls

Haven't experienced this first hand, but I'd say the bank would make a margin call based on the interest rate rise, how they calculate it I'm not quite sure but it would be something like the yearly rental value for every full percentage move upwards.

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Seems very odd, that the Value should be effected by a high interest rate, which would indicate highj inflation.
It's slightly counter intuitive however it makes perfect financial sense. raising the interest rate means that the SNB is trying to tackle inflation, when it raises interest rates inflation should stop or start to reverse which includes the prices of houses. The reason for this is actually a fundamental one as the risk free rate goes up the riskier assets have to go down in value to compensate for this.
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