Wednesday, Feb 07, 2007
Ten percent interest rate needed to bring house prices into line with inflation
Personal Loan: Ten percent interest rate needed to bring house prices into line with inflation
According to some experts the property value boom in the UK has become so out of hand that in order to bring it back in line the Bank of England would need to double the current interest rate, despite having hiked up the interest rate by three quarters of a percent over the past six months.
Posted by david20040_0 @ 09:39 AM (163 views) Add Comment
13 Comments
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1. David20040_0 said...
We are a long way from a housing crash. Each time the BoE up rates it makes no difference. We need at least 10% for even a little drop in prices.
2. Surfgatinho said...
VI source but still true up to a point. Look at New Zealand - IRs at 7.25% but failing to dent the property market. Why, fixed rate mortgages. I suppose the theory is IRs peak so banks can lend long term at 5%. Personally I think this is just postponing the inevitable, allbeit for 5-10 years
3. Davros said...
David20040,
Finding it more difficult to find positive articles about the future of the housing market?
You're swimming against the tide I'm afraid.
4. Boarder said...
Make it so!
5. Rimmer said...
David
You may be right but you have to be honest and define what a crash is, as i have previously mentioned i see a 30% reduction as a correction, a 60% reduction is a crash and i agree unlikely, factors that will cause a correction are really costs overall - Food - Fuel - utilities etc
Dont forget if RPI is 4.5% and house prices stayed static thats a 30% correction in 5 years.
6. Caesium said...
Totally agree with this. IRs still too low to prompt crash. Pound could devalue by 30% but would make little difference.
7. Nohpc said...
Interest rates are right. Property market is now stagnant and will remain so until the periolympic period. This will represent a nominal drop of 30% as mentioned above compared to RPI. Interest rates of 10% is a laughable suggestion in the current climate. This would surely control the housing market but at the same time destroy everything else in its wake.
8. David20040_0 said...
They just won't crash they really won't and it is really upsetting.
9. george monsoon said...
The BOE have really got it wrong this time. They are being over cautious, quarter percent rise .. no didnt do any good, lets risk another.. "what? inflation still rising? people still borrowing??" ok another quarter of a percent..... . . . and it goes on...
I recon the government and the BOE need to seriously think now about raising the rate much higher in one go, say at least 1 percent. What a shocker.. that might just stop us going bankrupt.
10. David20040_0 said...
There won't be a correction or a crash this thing is only going up.
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