Wednesday, Dec 19, 2007
Bad news from rightmove and the bulls start spouting...
Daily Express: CHEAPER LOANS SOON FOR MILLIONS
''MILLIONS of home owners can look forward to a happy New Year with interest rates set to tumble, experts predicted last night.
The Bank of England is expected to announce a quarter-point drop as early as next month.
And in a further boost for borrowers, industry leaders said rates may fall to five per cent or even lower by the middle of the year.''
Posted by hpwatcher @ 09:39 AM (2308 views) Add Comment
24 Comments
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1. planning4acrash said...
Lets see the RPI CPI gap grow then. And LIBOR rates will continue to increase in line with market inflation expectations.
2. paul said...
Yes, no mention at all of spiralling RPI inflation.
"House prices in this country have stalled in recent months as owners nervously await the outcome."
Not quite. Owners have run for the exits trying to cash in before the dramatic falls really bite.
3. maddison said...
Low mortgage rates and falling house prices. This is perfect for people wanting to get onto the house ladder. OK falling knife and all that but falling house prices could be intepreted as becoming "more and more affordable.... "
4. hpwatcher said...
"House prices in this country have stalled in recent months as owners nervously await the outcome."
Quite. House prices never stall, they either go up or down.
5. confused76 said...
Maddison
... oh please
6. voiceofreason said...
I would say that the job losses will increase quickly in Jan.
Capgemini is already reducing headcount by 600 following HMRC debacles. Whilst doubling headcount in India... 18000 to 30000 !!!!
http://sify.com/finance/fullstory.php?id=14577733
600 to go in Capgemini, 25,000 is HMRC...
http://www.theregister.co.uk/2007/11/22/darling_disaster_good_id_cards/
Glad I bought BRICStars fund ...
7. renting2 said...
Anyone that I know who was planning to move/buy has now put all plans on hold for 6 months to see what happens.
Christmas has just got in the way by delaying general public response. Once it starts going down it will keep going down. The speed of it may catch a lot of people by surprise.
8. Nic said...
This is an interesting move which leads to the questions… at what point will inflation be brought under control. I've noted in the media that people have been saying interest rates are no where near to the highs in the 90's but then again if you have an interest rate of say 2% and then it rises to 5.5% that effectively equates to a more then 100% increase, it a far greater increase then 10% to 13 or 15 %… sure a 100 + % increase has got to hurt when money is not so easily available as is the case at the moment. Regarding all the money being pumped into the markets, well I guess that's been offered to help the banks to cover the already existing losses and hence prevent the collapses, it's still got to be paid back and that's still going to mean that for a while loans will not be so easy to come by for some as has been the case in the past few years or at far high interest rates then people have been able to enjoy over the past.
On the inflation note, well as the cost of living increase any savings given by interest cuts will only be taken away by the higher cost of living, so in the end my guess is that inflation will be a much worse pain then interest rates and when finally the BOE get back to sorting out inflation its going to be a greater does of medicine to deal with i.e. high inflation + high interest rates… Given that inflation will eat the money saved by interest rate cuts, it would be hard to see where people would find additional money to cover mortgage payments.
9. techieman said...
I think Maddison EVENTUALLY you will be right just as EVENTUALLY (i.e. now) the bears were proved right. The problem is always going to be what does EVENTUALLY mean. Think a bubble thats taken years / decades to ferment is either gonna suffer a big pop or a steady decline - stabilise and then further falls. In any case unless the Big pop is REALLY big, then this isnt (and wont) be over in a few weeks or even months. Whats interesting is to see how the Central Bankers are reacting. I think history will show that they tried everything to avert what history suggests will be a slump (if it was just a recession for a few quarters then they would be fine with that) and sadly i think they will fail. How the resultant failure will manifest is the question this site in pacticular has been pondering.
10. confused76 said...
guys
the stock of property for sale and rent is so high that it will take a generation to clear. just compare with February of 2007 values and look at the exponential up-trend
http://media.primelocation.com/content/priceindex/priceindex_200711.pdf
until now prices and rentals are flat, but there is a limit to which BTLosers can cling to this cliff. Those lucky enough to have bought in 2004, 2005 will take profit and will not care about discounting 10 or 20 percent since have already made 150% plus gains.
Those BTLs who entered in 2007 will go into negative equity and then the BIG BANG
Why am I so sure about this... quite simple: the BTL demand has simply vanished for the same simple reason that has convinced these brainless to enter the market in the first place: GREEEEEEEDDDDDDDDDDD
Now you can see BTLs with blood in their eyes..... "Yes we will snap fantaztik deals after March, maybe after May, maybe after the summer!"
However they are digging their own grave
Rental growth is a myth. Rentals can only grow at salary infation. But some infatuated mortgage preacher has convinced them otherwise.
UAHHH HAHHAHHHAH HA
UAHHH HAHHAHHHAH HA
UAHHH HAHHAHHHAH HA
UAHHH HAHHAHHHAH HA
UAHHH HAHHAHHHAH HA
UAHHH HAHHAHHHAH HA
11. nopensionnohouse said...
@8 techieman
Lol.
Yeah I have been thinking about all this and you re BANG on I reckon:
House prices will definitely rise or fall, interest rates will definitely rise or fall. Inflation will absolutely rise or fall and wages will (in real terms) rise or fall.
Obviously this could happen in the long or short term… but one thing is for sure: A of combination of the above will definitely happen eventually, unless it doesn’t of course.
(Your statutory rights are not affected).
12. techieman said...
nopension you are possibly, probably, almost certainly right!!! ;-)
I think Maddy cant accept that the bears are right NOW although there were admittedly alot of false dawns for some people. Which is good because when (now) it does happen bears are tarred with the "doomsters" brush and "here they go again". Someone else here said its all about timing, we have all KNOWN for a long time that HP are overvalued and unaffordable. But what nobody knew (myself included - about a year too early) when things would start to reverse.
13. it_is_going_with_a_bang said...
''MILLIONS of home owners can look forward to a happy New Year with interest rates set to tumble, experts predicted last night."
Talking up £20 a month. What a huge difference that will make. I think I will rush out and spend now.....
Maybe put 1/3 tank of Petrol in the car, Oh we will all be sooo happy and content and the world will fantastic again, until the next Council Tax rise takes it away from me!
Just when I thought I was gona have a Happy New Year!
14. sold 2 rent 1 said...
Here is how I think this mess will play out.
As the graph shows March 2008 will be a low point. (Sub-prime resets reach a maximum level, banks will fess up to more bad debts, all stock markets will have fallen at least 20% from their highs).
IRs in developed countries will have been slashed, inflation and recession fears growing.
But between March 2008 and April 2009 we will have some temporary optimism as oil and commodity prices ease and reduce inflation pressures.
Lower IRs take the pressure off consumers and they will take on more debt.
All bailouts will have their temporary affect
After April 2009 we will see the carnage renewed as the banking sector begins to crumble proper.
It happened in 1930 like this too. 9 months after the 1929 crash the crisis was declated over. Then the real pain began.
15. techieman said...
s2r - yes absolutely agree with most of your analysis. Have always though an Elliott A-B-C. With the dead cat bounce [B] to suck in the unwary (eg Maddy?) then the real plunge. Not convinced re the stock market which is why i think the plunge comes later. [Stock markets have been leading indicators for each recssion and both the Depressions].
16. uncle tom said...
OK let's keep it really simple...
If the speculators don't think house prices are going to rise, they are not going to buy more.
If they don't buy more, house prices will fall, because others can't afford them.
If house prices fall, speculators who have 85% loans on a score of properties will be desperate to get out.
Little details like market interest rates being adrift of central bank rates, and BTLers finding themselves unable to liberate equity to fund new purchases only reinforce the argument
Now, what do the speculators really think - right now.. - it's been a while since we've seen an up-to-date survey - I wonder why....
17. george monsoon said...
Off topic a bit but,
I hear Electronic Data Systems or EDS are cutting staff here in the uk and off shoring almost all thier current staffing to Eastern Europe, China and India.
This is the company that looks after all the benefit agencies in this UK, if you didn't already know.
Are you happy with your details being shipped over seas?
I bloodywell aint!
18. renting2 said...
I think organisations have to have your permission to process your data outside the EU. You will have given this permission impliedly or stated somewhere. But I think you can withdraw that permission. Info Commissioner good start. If enough people did that there'd have to be a rethink.
19. shipbuilder said...
This is an incredibly irresponsible headline from one of the worst newspapers in the country. It basically should read SPEND! SPEND! SPEND! No question marks whenever inflation is at 2.1% when every example they use to illustrate rising prices is well above that. I despair at the level of journalism in Britain, most of which is now on a par with John Craven's Newsround on Children's TV when I was younger. We are fed quick, analysis-free soundbites and spin, so we can get on with the more important job of spending money and ignore the real issues.
It occured to me recently that totalitarianism has failed historically simply because it is brought about by revolution - the government declare their controlling intentions blatantly and openly and all at once. When it is done over decades - all politics moving to the centre ground, increasingly backed by VI, removal of choice, a gradual build to state control 'for our own good', dumbing down of the media and drip-drip corporate hegemony and mass consumerism, all under the banner of 'democracy', it's much more efficient.
20. techieman said...
Also because transaction costs are high and there is the fear of the BTLs missing the next upmove (i.e. saying that if they have to get out they will need to pay EAs and then pay Stamp Duty / legal fees and Surveyors to re-enter, I think to begin with only forced sellers will... erm sell initially. Others will hold on, until things get obvious. Before 89 everybody told me "house prices never fall, sometimes they stabilise and then increase again" - well guess what they can fall. Because of the Correction after that and the fact that the market took out the 1989 high, most people sadly have the mentality "ah well if there is a fall we just need to hang on for a few years and everything will be ok".
Renting 2 - i was in a seminar which included the top person in this field (funnily enough shes not English) and although that was off topic too( the seminar concerned arbitrating disputes) she said the same thing about permission, although that was relavant to discovery orders, and whether you need to comply.
21. techieman said...
Also because transaction costs are high and there is the fear of the BTLs missing the next upmove (i.e. saying that if they have to get out they will need to pay EAs and then pay Stamp Duty / legal fees and Surveyors to re-enter, I think to begin with only forced sellers will... erm sell initially. Others will hold on, until things get obvious. Before 89 everybody told me "house prices never fall, sometimes they stabilise and then increase again" - well guess what they can fall. Because of the Correction after that and the fact that the market took out the 1989 high, most people sadly have the mentality "ah well if there is a fall we just need to hang on for a few years and everything will be ok".
Renting 2 - i was in a seminar which included the top person in this field (funnily enough shes not English) and although that was off topic too( the seminar concerned arbitrating disputes) she said the same thing about permission, although that was relavant to discovery orders, and whether you need to comply.
22. renting2 said...
You're so right Shipbuilder! Go 2 pages into the same rag and you see 3 articles. 'Recession? It's a 50-50 Chance' and 'Rock Crisis and the Credit Crunch Could Cost British Taxpayers £70bn' and ''R' word must not trigger disaster'. Just catering to every emotion involved.
They shout from the front that's it's alright to spend this Christmas with some caution in the small print inside. Presumably so they can say they put a balanced view. But as I read it, even their balanced view opts for a bit of a hangover for 3 months after Xmas then back to normal.
The problem is, when it all goes pear shaped, no-one will remember what they declared!
23. uncle tom said...
shipbuilder,
You are being too kind when you call the Express one of the worst papers - it is THE worst newspaper - as the rest of the gutter press don't make such a pretence of being serious..
Why anyone buys this rag is beyond me..
24. drewster said...
@s2r1, well done on finding that Princeton Economics 8.6 year cycle graph. I haven't always believed in your more off-beat ideas about K-waves or Mayan calendars, but this 8.6 year cycle looks more robust. It catches the 1992 housing crash and the 2000 dot-com peak/crash. Business cycles are a necessary part of the economy, capitalism requires boom and bust in order to function correctly. That's why we're due for a bust now.