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Bank Of England Expert Says Hpc Is Over

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Guest sillybear2

Great, so is this the same BoE that also saw the crash coming?

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He didn't say its over.... he said the worst is over IE 39% is still possible..... typical overeaction. He didn't call the date of the HPC as I recall.... but as I recall while several on HPC cliamed housing would fall, many were years out in their prediction..... all this guy is saying is firstly that the worst is over and secondly that any recovery would be very slight.... seems like an HPC man to me, rather than one to have rocks thrown at him in typical knee jerk fashion.

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He didn't say its over.... he said the worst is over IE 39% is still possible..... typical overeaction. He didn't call the date of the HPC as I recall.... but as I recall while several on HPC cliamed housing would fall, many were years out in their prediction..... all this guy is saying is firstly that the worst is over and secondly that any recovery would be very slight.... seems like an HPC man to me, rather than one to have rocks thrown at him in typical knee jerk fashion.

to be honest - I broadly agree with you and have been thinking this all day about this quote

my thoughts are he expects nominal house prices to stabilise whilst inflation lets rip, but I def agree he is being bearish

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Where are people going to get the money from to buy at current prices?

P R E C I S E L Y !!!!!!!

THEY WERE ONLY ABLE TO GET THE "MONEY" UP TO 2007/8 BY RAISING

LIAR LOANS...

THE ONLY WAY FOR MOST PEOPLE TO "AFFORD" PROPERTY WAS TO LIE AND CHEAT!! OR WIN THE LOTTERY.

Whatever you do, people out there --- do NOT take out a Liar Loan. :angry:

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Inflation is not going to let rip.

Asset prices will plummet.

It's sad really isn't it? People are expecting 70's style inflation to bail them out.

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70s inflation is a red herring - that period saw price & wage inflation, driven by strong unions.

Theses days the only inflation we'll see is purchase price inflation....but unfortunately to hugely indebted borrowers wages won't keep pace at all...or if they "do"...it will be to an inflation rate of the goverment of the day's choosing, which will bear no resemblance to reality.

Now is absoultely the worst time to saddle yourself with huge mortgage debt, as your ability to ever pay it off will shrink over time

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Even in the unlikely event he's right, it seems a very callous and irresponsible thing to say.
The Big Question: Is the housing crash finally over, and is the market now recovering?

By Sean O'Grady, Economics Editor ... 3 July 2009

Why are we asking this now?

Yesterday David Miles – author of a Government-commissioned report on the mortgage market in 2004 and a new member of the Bank of England's Monetary Policy Committee – said that "expectations are crucial in the housing market and they look a bit better now than a few months ago ... My hunch – and I put it no stronger than that – is that we have seen most of the overall aggregate house price falls." The Bank, meanwhile, said that the availability of mortgage credit was expected to rise over the next few months. Earlier this week the Nationwide Building Society's house price index registered a 0.9 per cent rise in prices during May – three out of the last four months' figures have shown an increase; the Halifax and other indices agree. The House of Commons Public Accounts Committee also recommended yesterday that the planning process be speeded up to allow enough homes to be built to meet demand.

Well he did say it was only "my hunch - and I put it no stronger than that" !!! BUT LET MY HUNCH BE PRINTED IN EVERY PAPER AS HOUSE PRICE CRASH HAS FINISHED.

Ah phew I feel better now, what't the next hunch coming up?

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Guest DissipatedYouthIsValuable
Well he did say it was only "my hunch - and I put it no stronger than that" !!! BUT LET MY HUNCH BE PRINTED IN EVERY PAPER AS HOUSE PRICE CRASH HAS FINISHED.

Ah phew I feel better now, what't the next hunch coming up?

Let me know when there's a piece about Mervyn King's use of knucklebones and feelings in the waters.

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Has anyone worked out whether trend is now up on halifax as well? THe article mentions other indices 'agreeing with nationwide' but as far a I know LR is still showing falls mom.

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Guest DissipatedYouthIsValuable
Has anyone worked out whether trend is now up on halifax as well? THe article mentions other indices 'agreeing with nationwide' but as far a I know LR is still showing falls mom.

The apparatchiki are manipulating everything with their Magic Spoon of Propaganda.

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http://news.bbc.co.uk/1/hi/business/3300469.stm

What next for my mortgage?

Prior to the report there were suggestions that to make long-term products more attractive, the government could promise to bail out mortgage lenders if they get into difficulties or provide tax incentives.

But either option would incur costs that would have to be met with taxpayers' money, - at a time when the government facing a black hole in its finances.

Professor Miles prefers to take a softly-softly approach and will talk to Financial Services Authority and the Office of Fair Trading about which steps to be taken to improve the functioning of the market.

But even if the UK moves to continental style fixed mortgage marketplace it is unlikely to guarantee an end to housing market boom and bust.

In countries such as the Netherlands and Spain, where fixed loans are the norm, there has also been a pronounced house price booms in recent years.

http://www.independent.co.uk/news/business...ges-576175.html

Please don't call it market failure, says Professor David Miles, but the UK mortgage market is not working as well as it should for most borrowers. In a Treasury commissioned report on the mortgage market, Professor Miles puts UK lenders on notice that he has identified flaws in the system and intends to recommend policy solutions in time for next year's Budget. But what are these flaws, and is Professor Miles correct in thinking that the market will be improved by addressing them? I'm not sure he's right on either count.

Please don't call it market failure, says Professor David Miles, but the UK mortgage market is not working as well as it should for most borrowers. In a Treasury commissioned report on the mortgage market, Professor Miles puts UK lenders on notice that he has identified flaws in the system and intends to recommend policy solutions in time for next year's Budget. But what are these flaws, and is Professor Miles correct in thinking that the market will be improved by addressing them? I'm not sure he's right on either count.

Nobody commissioned to write a report on a perceived failing in the system is going to come to the conclusion that there is nothing wrong with it at all. Yet Professor Miles struggles to find obvious fault with a market which, by his own admission, is highly competitive, extraordinarily innovative and has succeeded in hugely expanding home ownership in Britain.

In order to understand the difficulty with this report, you have to go back to the reasons why it was commissioned. The Professor Miles study was born out of the five euro tests, which found that the housing market was a key structural difference between the UK and the core eurozone economies. That in turn would make it difficult for Britain to live with Continental interest rates without changes to the way housing is financed. This is because British mortgages are overwhelmingly variable rate or short-term fixes, in contrast to the Continent, where long-term fixed rate deals predominate.

http://www.hm-treasury.gov.uk/press_milesinterim_03.htm

Miles Review of UK Mortgage Market: Interim report published

Professor David Miles today published his interim report analysing why long-term fixed-rate mortgages currently account for only a small proportion of the UK mortgage market.

While many borrowers could benefit from longer-term fixed-rate mortgages few choose these products at the moment. Mortgages in the UK are overwhelmingly either at variable rates or at rates fixed for around two years. The report points to three key factors that account for the low take up of longer-term fixed-rate products:

1. Borrowers tend to attach much greater weight to the level of initial monthly repayments than to the overall cost of borrowing over the life of the loan.

2. Many borrowers have a poor understanding of risk and therefore pay little attention to the insurance which longer-term fixed-rate mortgages can provide against unexpected interest rate rises.

3. The way in which many mortgage lenders compete for new business results in cross-subsidisation from existing borrowers paying standard variable rates (SVR) to new borrowers taking out discounted variable and short-term fixed-rate mortgages. This means that longer-term fixed-rate mortgages appear expensive when compared with discounted mortgages.

The development of a larger market in longer-term fixed-rate mortgages also depends on the efficiency with which mortgage lenders are able to raise funds to finance them, which in turn depends on a number of factors. Some of these factors would probably prove temporary if greater demand emerged. For example constraints due to insufficient liquidity or the inability of lenders to assess the pre-payment risk associated with fixed-rate products would ease as a market developed and lenders’ experience of pre-payments grew. Others constraints, such as capital requirements, accounting rules and legislative constraints on building societies, might require a policy response to enable the market to develop properly. In the light of further consultation on these funding issues specific recommendations will follow in the Final Report.

The report also presents evidence that borrowers’ tendency to attach too great a weight to the level of initial mortgage repayments can contribute to macroeconomic instability and can make monetary policy more difficult to operate. Such macroeconomic problems would be much reduced if households in the UK were encouraged to take a more forward-looking approach to borrowing and to choosing between mortgages. This is clearly desirable in its own right, whether or not the UK adopts the euro.

On publication of his report Professor Miles said:

“In recent decades there has been little long-term fixed-rate mortgage lending in the UK. This report analyses why that is so. For many households, particularly those borrowing a great deal and those whose incomes are uncertain, there are significant advantages of fixing the level of repayments for several years. Yet few of such borrowers take out longer-term fixed-rate mortgages.

Borrowers need to be helped to understand risk better and to make more forward-looking decisions and lenders enabled to fund loans and handle risk in the most cost effective way. I look forward to consulting further with all interested parties before putting forward recommendations next year.â€

Professor Miles will publish his Final Report, with recommendations, around the time of next year’s Budget.

He's a Brown happy clappy lacky.

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Prof Besley, who is standing down from the MPC in the autumn, said that the MPC "will need at some point to tighten policy through... raising nominal interest rates and 'quantitative tightening,' to make clear that upside risks to inflation can be headed off and to maintain a credible policy reaction function."

This is the bit that does it for me. They are already talking about raising the interest rates. This guy leaves in autum and he will probably start promoting the tightening of the policy before he goes.

Why you lot go on about "what recovery" bewilders me. Let them think we have got the green shoots they desperately desire. We are out of the mire and over the rainbow, all is well.

SO GET THE BASE RATE UP. Then what do you think will happen.

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