atans1

Why oil price falls bad for mortgagees

In Economy, Financial competency, Property on 16/12/2014 at 12:06 pm

Oil price-led disinflation is desirable as it helps competitiveness gains by reducing cost and price differentials analyst at Lombard Street Research quoted by FT. So gd for economic growth and property prices?

True but then:

Household debt in Korea, Malaysia and Thailand is now in excess of 80 percent of GDP; it’s 76 percent in Singapore. When borrowers loaded up on debt, they expected three things: Money-printing in rich nations would keep borrowing costs low for an extended period; domestic property prices would keep rising; and steady inflation would boost wages, reducing the real household debt burden.

The third part of this equation has buckled. Inflation is low – and slowing – across Asia. As oil prices fall, the slide will accelerate. In Korea, China and Singapore, deflation is now a real threat.

http://blogs.reuters.com/breakingviews/2014/11/28/cheap-oil-worsens-asian-debtors-lowflation-woes/

(Emphasis mine)

Deflation means real interest rates go up.

The born losers who read TRE will be happy to see their fellow S’poreans go bust. Uniquely S’porean.

 

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  1. Deflation is good.
    It resets everything back to zero.

    Too bad some may jump.. but thats life…, no?

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