Friday, May 04, 2007
Nothing to see here, move along
Firstrung: House price crash not on radar unless interest rates reach 10% - Moneynet
Mortgage rates may need to rise to 10 per cent before any serious threat of a property market collapse becomes a reality, Moneynet.co.uk has suggested... Despite warnings of imminent difficulties in the face of the widely anticipated 0.25 per cent base rate rise next week, a comparative analysis of the market back in 1987 - when similar, overheating conditions prevailed - and 2007 by the online data comparison service shows that the danger points arise when the percentage of take home income needed to service mortgage interest rises to around 30 per cent.
Posted by converted lurker @ 11:53 AM (162 views) Add Comment
7 Comments
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1. confused76 said...
illiquid markets are crashed "at the margins"
averages and medians mean nothing!
another nice piece of spin from the lenders
2. Davros said...
I've long since stopped listening to vested interests.
Lets hope he puts his money where his mouth is.
3. sold 2 rent 1 said...
This bubble is about debt - not about soaring IR
Here is an article posted earlier that for me is the article of the year
http://www.safehaven.com/article-7475.htm
4. C'mon Correction said...
This is absolute rubbish. If it were true, then the BOE could up rates to 6-7% without a worry. In reality, they have HUGE worries that 0.25% rises will crash a fall in asset prices.
If interest rates hit 10%, we would be in a full-scale Depression, let alone a recession.
We'll see what happens to prices end of year with rates at 5.75%.....
5. Cheekie Charlie said...
What this article doesn't dwell upon is which rate are we taking about? If over a period of time the BOE raises IR to say 6.5% then this would push Halifax PLC SVR to nearly 9%!
With HPI double digit and here in Leeds I certainly don't know anybody who earns anything like £40K per annum the tipping point is much, much closer than these clowns seem to believe. I also know alot of the people who have recently taken out 100K mortgaes or MEW'd and the figure of 15% of take home pay to service these debts is a joke 50% would be a more conservative estimate.
6. Frank F said...
Did i read that right, average income nearly thirty nine and half grand, that may be the case if you include the super rich in the average calculation, but they wont be looking for a house at £118500.00. They should look at the wage of the average working class person if they're going to quote statistics.
7. Sirgoogle said...
This is rubbish. A crash will occur when the public sentiment changes. The economic reasons for a Crash were passed way back in 2003 (i.e. if logic applied then we would be in the bottom of a not so very deep trough by now). The whole Property market is based on psycology and "feel-good" issues - and drive by "get rich quick" "I want it now" logic and speculation. When a block of sentiment changes in the public the fall will be quick and deep and last longer than anyone can imagine.