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Darkman

When Are Interest Rates Going Up?

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When are interest rates going up?

For chrissakes... when when WHEN?! :angry:

:)

More importantly, what will happen when they do? will the banks who are effectively overcharging by failing to pass on the savings they currently enjoy absorb the hike? Only when the true cost of borrowing is recognised will we begin to see the true state of the house price crisis. Then things will get interesting

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Guest DissipatedYouthIsValuable

We're going Japanese, it's going to be 10 years of new fakery.

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A topic close to my heart. I BATP (bought at the peak) albeit with a fairly small mortgage. On a base rate tracker at the mo paying negligable interest, so just busy paying it down before rates go really high.

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We're going Japanese, it's going to be 10 years of new fakery.

I read that there has been huge volume in sept/dec vix.j puts. Seems that the big boys are expecting a head on deflationary smash. I was convinced to begin with that inflation would win the arguement but apparently not, not yet anyway.

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More importantly, what will happen when they do? will the banks who are effectively overcharging by failing to pass on the savings they currently enjoy absorb the hike? Only when the true cost of borrowing is recognised will we begin to see the true state of the house price crisis. Then things will get interesting

The cuts in interest rates completey reversed the downside momentum in house prices.

Rates will probably only go up in a big way when the economy is improving and unemployment is falling.

The house price correction is over.

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But they are still going down now. So do you mean nearly over?

My prefered statistic is the Nationwide figures (see my sig).

Other people will use different stats.

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The cuts in interest rates completey reversed the downside momentum in house prices.

Rates will probably only go up in a big way when the economy is improving and unemployment is falling.

The house price correction is over.

The correction is far from over.

edited your signature for you

Nationwide average monthly house prices:

Feb-09 £147,746 <- Low in Feb-09 will mark the first bottom in house prices for this cycle

Mar-09 £150,946

Apr-09 £151,861

May-09 £154,016

Jun-09 £156,442 < - Almost at the top of the bull trap, the peak before the next major leg down.

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The correction is far from over.

edited your signature for you

Nationwide average monthly house prices:

Feb-09 £147,746 <- Low in Feb-09 will mark the first bottom in house prices for this cycle

Mar-09 £150,946

Apr-09 £151,861

May-09 £154,016

Jun-09 £156,442 < - Almost at the top of the bull trap, the peak before the next major leg down.

I tend to agree with this interpretation of these numbers.

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I tend to agree with this interpretation of these numbers.

We may see the odd down month, but i doubt if we will see prices fall below the 147K bottom seen in Feb.

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We may see the odd down month, but i doubt if we will see prices fall below the 147K bottom seen in Feb.

Respect for making your call. Obviously I think your wrong, my main reasons being that I cant see where the wage inflation or loose credit is going to come from.

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I read that there has been huge volume in sept/dec vix.j puts. Seems that the big boys are expecting a head on deflationary smash. I was convinced to begin with that inflation would win the arguement but apparently not, not yet anyway.

+1

I was firmly in the inflation frame of mind too but deflation it is.

Pity those with large debts; they're fecked.

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+1

I was firmly in the inflation frame of mind too but deflation it is.

Pity those with large debts; they're fecked.

I used to think this but now I'm not so sure.

They'll just go bankrupt. Now normally this would mean you would be ineligable for credit for the rest of your life, and more importantly ineligable for an awful lot of jobs that carry out checks for such things.

Now, however, not being eligable for credit probably won't matter given that if this continues there won't be any, and being ineligable for jobs also won't matter because there won't be any of those either :lol:

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I used to think this but now I'm not so sure.

They'll just go bankrupt. Now normally this would mean you would be ineligable for credit for the rest of your life, and more importantly ineligable for an awful lot of jobs that carry out checks for such things.

Now, however, not being eligable for credit probably won't matter given that if this continues there won't be any, and being ineligable for jobs also won't matter because there won't be any of those either :lol:

Given the 30%+ spending cuts which must come; the inability to provide anymore fiscal stimulus; the fact that the QE and rock bottom base rates have done nothing to stop deflation, I guess it could just about be game over. :(

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Are you talking about Boe base rates or real interest rates ??

For the savers you can get a 5 yr fixed rate bond @ 5.4% at the moment (nice if we hit deflation), for borrowers longer term fixed rate mortgages are approaching 6%.

As other posters have commented its all about calling the inflation/deflation scenario correctly but for the time being Boe base rates are largely irrelevant.

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My prefered statistic is the Nationwide figures (see my sig).

Other people will use different stats.

Oh yes...do you use the Rising Unemployment/Rising House Prices Statistics? Fooking miracle it is! Gordon abolished Boom and Bust and has now achieved HPI during rising unemployment! Flipping miracle!

Wake up fool!

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The cuts in interest rates completey reversed the downside momentum in house prices.

Rates will probably only go up in a big way when the economy is improving and unemployment is falling.

The house price correction is over.

I have to disagree, we are no-where near. The reduction in interest rates has only postponed the problem and the downside momentum as you describe it is the natural course of events which, unfortunately, is both inevitable and necessary. The slide is a natural return to the REAL values of properties, the correction will only be over when those values are arrived at.

A house is a building to live in and every household calculates a budget to do just that. The budget is met by money earned - wages. If the wages are restricted due to lack of work or a reduction in pay then the budget is squeezed and the value of the house adjusted accordingly.

Historically and traditionally interest rates are much higher than at present, therefore the current rates are undervalued and should not be considered when establishing the value of a house. Low rates are a nice benefit but NOT a measuring stick of any worth.

Take a realistic estimate at the accepted and traditionally established cost of borrowing, look at how much dosh is coming into a house and you can calculate a TRUE value for the place you live in - based on what you able to pay in everyday economic conditions.

I would suggest that we are still looking at a potential drop of between 25% and 40% before housing becomes affordable to first time buyers and the ordinary man in the street

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I think the optimism is a reflection of the media propaganda rather than the facts. IMO the banks are in debt to the tune of 100 trillion and only being kept on life-support by QE.

Interest rates will go up when the bond markets dump dollars and sterling. If they were rational, they'd have dumped them already.

Quite when irrational behaviour stops, is hard to say. Presumably, the market is being gamed, and everyone's following a false lead. Presumably, GS is selling hard through 3rd parties, while pretending to buy as themselves. Ditto China etc. How long before the last sucker has followed the lead? How long before the selling outnumbers the buying?

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Guest happy?
We may see the odd down month, but i doubt if we will see prices fall below the 147K bottom seen in Feb.

QE has cost £200 billion to date - you think that enough to stave off further falls. Unemployment continues to rise even after the recession ends - and house prices go south with jobs.

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