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JonoP

Uk Subprime Teaser Rate

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The government (sorry, BoE) have basically created the equivalent of the US Mortgage companies ‘teaser rate’ that lead to the subprime fiasco.

They have dropped interest rates to a level that the country cannot sustain in the long term. Interest rates will HAVE to go back up if the UK is to be able to borrow the amount of money it needs (indeed, I suspect the anticipation of GBP returning to its normal position as a high yielding currency is one of the factors driving the rally in the pound).

So, as evidenced by the halliwide figures, we have lots of new buyers scurrying out to buy property at inflated prices, basing their purchasing decision on the artificially (and temporarily) low cost per calendar month of the mortgage.

I really, REALLY, hope they are not going for trackers or two year fixes.....

In the US, the banks were culpable of luring customers in to dodgy financial commitments that they could not sustain. In the UK, it is the government that is culpable. And all because Gordon Brown craves power and thinks that this will help him get elected......

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Total repeat of Greenspan's ARM gambit. Go out and borrow ******* before we devalue what is left, or be priced out forever.

All it does is produce churn for the financials for a while and buries the country under a bigger mountain of unpayable debt.

King will be joining Greenspan in tomorrow's history books.

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This is spot on. Rates have bottomed, both base rate and mortgage rate. The only way is up.

Yup, I reckon a raise in interest rates will be the catalyst for the next downwards lurch

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