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Low Interest Rates Here To Stay, Big Boost For Property Market

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Guest The Relaxation Suite
daily express front page headline

UK interest rates will be 4% within 18 months.

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Northern Rock offering 3.75% on a 1 year bond. If Government owned banks need to keep capital at that rate, then IRs are headed only one way and soon.

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IR's can stay at zero for the next decade, or much longer.

Japan is the litmus paper here, and they have managed to stave off disaster since their 1990 crash with ZIRP....but they do of course have much less personal debt loadings per capita, much higher savings, and are a much much more productive and exporting society.

However, they did have a huge property crash, which is still crashing in slow motion.

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No doubt most of the cretins who read the Express won't realise that the glut of mortgage money that fuelled their precious HPI came from the Yen carry trade and that this tap was turned well and truly off in 2007. 0.5% from the Bankrupt of England is irrelevant.

Edited by Von Moses

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Northern Rock offering 3.75% on a 1 year bond. If Government owned banks need to keep capital at that rate, then IRs are headed only one way and soon.

I still find it hard to believe that the government controls the policy at NR. Yes, I understand the legalities, but if you look at their behaviour, they are no different than the other banks.

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IR's can stay at zero for the next decade, or much longer.

Japan is the litmus paper here, and they have managed to stave off disaster since their 1990 crash with ZIRP....but they do of course have much less personal debt loadings per capita, much higher savings, and are a much much more productive and exporting society.

However, they did have a huge property crash, which is still crashing in slow motion.

+1

Low interest rates will help avoid a crash.

A muted slide is the worst I expect.

More probable is property (and salaries) staying virtually the same price for a decade.

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... cretins ... won't realise ... glut of mortgage money ... fuelled ... HPI came from the Yen carry trade

Eh? The what? What's a carry trade ...? What's a Yen got to do with it?

... this tap was turned well and truly off in 2007.

Eh? It was?

The reality is that most of us out here in the world have NO idea how stuff works. If your job and social life have nothing to do with anything to do with money, finance, the economy, the City, etc etc, then you just get on with your life, which is so busy now just getting to/from work, doing the shopping/cooking/cleaning, that there's precious little time to then sit down and study 10 essential other subjects to a level where you could actually make sense of them.

I can't even get a new mobile phone because I don't understand how they work/contracts/paying for them/keeping my number .... and I'm not thick, just I know nothing of the world you guys seem to live in. There's too much to find out, learn, read, keep up with, consider, etc etc.

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+1

Low interest rates will help avoid a crash.

A muted slide is the worst I expect.

More probable is property (and salaries) staying virtually the same price for a decade.

so it really is different this time?

:lol:

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so it really is different this time?

:lol:

Evidently yes. Unprecedented rate cuts. Unprecedented money printing. Unprecedented lack of house building. Unprecedented immigration. Elimination of forced sellers through a combination of rates, interest paid up to £200,000 and nationalised banks. All of these are new factors.

The credit supply argument doesn’t seem to cut it anymore. It seems prices will be maintained through low transaction levels – with few people willing to sell below 2007 peak.

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Eh? The what? What's a carry trade ...? What's a Yen got to do with it?

Eh? It was?

The reality is that most of us out here in the world have NO idea how stuff works. If your job and social life have nothing to do with anything to do with money, finance, the economy, the City, etc etc, then you just get on with your life, which is so busy now just getting to/from work, doing the shopping/cooking/cleaning, that there's precious little time to then sit down and study 10 essential other subjects to a level where you could actually make sense of them.

I can't even get a new mobile phone because I don't understand how they work/contracts/paying for them/keeping my number .... and I'm not thick, just I know nothing of the world you guys seem to live in. There's too much to find out, learn, read, keep up with, consider, etc etc.

Carry trade, bond market, securitization, bubble economics, various other issues - all extensively discussed on HPC plus plenty of info elsewhere on the internet about it.

I knew nothing about any of this until I decided to do a bit of research into why prices were so bonkers, a few years back prior to buying a house. Thankfully, what I found out prevented me from buying that house, near the peak, a decision which has left me sitting pretty now.

Given that a house is going to be the single largest purchase most people make and that it will necessitate signing up to debt in the 'hundreds of thousands of pounds' range, I don't think it's too much to expect that people would do a teensy bit of reseach into it before getting into the market and putting the debt handcuffs on.

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Evidently yes. Unprecedented rate cuts. Unprecedented money printing. Unprecedented lack of house building. Unprecedented immigration. Elimination of forced sellers through a combination of rates, interest paid up to £200,000 and nationalised banks. All of these are new factors.

The credit supply argument doesn’t seem to cut it anymore. It seems prices will be maintained through low transaction levels – with few people willing to sell below 2007 peak.

The points in red all require the Govt to be able to borrow more money, which, it is almost certain, they will not be able to do.

Immigration will cease when there are not any jobs for immigrants to come over here for. I heard a news report this morning saying that immigrants are leaving the UK at a record rate.

House builders need to build houses, at a price people are prepared to pay. If they do not, they will not survive. If they go bankrupt their land banks will be sold off at current market value and other people will build on the land and price accordingly.

Edited by Pond321

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The points in red all require the Govt to be able to borrow more money, which, it is almost certain, they will not be able to do.

Immigration will cease when there are not any jobs for immigrants to come over here for. I heard a news report this morning saying that immigrants are leaving the UK at a record rate.

House builders need to build houses, at a price people are prepared to pay. If they do not, they will not survive. If they go bankrupt their land banks will be sold off at current market value and other people will build on the land and price accordingly.

And the government seems willing to do so until the money markets are flowing again and the lenders are put under state pressure to provide mortgages at 2007 levels.

As much as I'd like to see prices continue to fall, it's clear that the government will do whatever it takes to reverse or delay this regardless of future consequences.

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And the government seems willing to do so until the money markets are flowing again and the lenders are put under state pressure to provide mortgages at 2007 levels.

As much as I'd like to see prices continue to fall, it's clear that the government will do whatever it takes to reverse or delay this regardless of future consequences.

IMO, the property market will fold after May 2010. 60% drops etc etc.

Once the votes are cast, every mortgage metalist pays.

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And the government seems willing to do so until the money markets are flowing again and the lenders are put under state pressure to provide mortgages at 2007 levels.

As much as I'd like to see prices continue to fall, it's clear that the government will do whatever it takes to reverse or delay this regardless of future consequences.

The government can only borrow to fund this kind of stuff if people are prepared to lend to it. And they are running out of people to borrow from. Thus they may WANT to carry on proping up the market, but if they cannot borrow the cash, they cannot actually do so.

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And the government seems willing to do so until the money markets are flowing again and the lenders are put under state pressure to provide mortgages at 2007 levels.

As much as I'd like to see prices continue to fall, it's clear that the government will do whatever it takes to reverse or delay this regardless of future consequences.

Which will come first :-

1. The Country runs out of money and has to go cap in hand to the IMF.

or

2. There is an election, but in the meantime (GB) try's desperately to reinflate the Housing Market Bubble.

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The government can only borrow to fund this kind of stuff if people are prepared to lend to it. And they are running out of people to borrow from. Thus they may WANT to carry on proping up the market, but if they cannot borrow the cash, they cannot actually do so.

Interesting piece on the Today programme this morning talking about the the bond market and the fact that investors are not liking at all our deficit figures before you even get to low IRs.

Apparently income tax would have to go up 20p in the pound to level off defecit spending.

As Pond says if the government cannot raise the cash on an increasingly cooling UK bon market where the heck do they get it from – apart from printy print?

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Low interest rates will help avoid a crash.

A muted slide is the worst I expect.

More probable is property (and salaries) staying virtually the same price for a decade.

Dropping interest rates help SLOW the crash by reducing peoples interest payments.

The 80s crash was largely prevented by devaluing the £1 by 50%... wages rose so the wage multiples returned closer to normal... actual prices only dropped 15% on average. All this was done on the back of the oil export revenues.

We can't do that this time. Thanks to the tories in the 80's instead of a standard 18 year housing bubble cycle, we had a double-bubble.

Now it's time for the double-crash.

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quote 'The Bank of England will be forced to keep them at 0.5 per cent throughout 2010 to balance low inflation and counter expected tax rises, say economists.'

but the expected tax rises will be paid by everyone including the not so well off and unless they are on a tracker the low interest rates will not compensate for that and as for the savers - they have been dropped on from a great height. :(

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Interesting piece on the Today programme this morning talking about the the bond market and the fact that investors are not liking at all our deficit figures before you even get to low IRs.

Apparently income tax would have to go up 20p in the pound to level off defecit spending.

As Pond says if the government cannot raise the cash on an increasingly cooling UK bon market where the heck do they get it from – apart from printy print?

Discussed here;

http://www.housepricecrash.co.uk/forum/ind...howtopic=124859

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quote 'The Bank of England will be forced to keep them at 0.5 per cent throughout 2010 to balance low inflation and counter expected tax rises, say economists.'

but the expected tax rises will be paid by everyone including the not so well off and unless they are on a tracker the low interest rates will not compensate for that and as for the savers - they have been dropped on from a great height. :(

Exactly, as discussed ibid, everyone will have to pay just so a few people can enjoy low interest rates on their mortgages.

The needs of the few (by which I mean Gordo and his buddies need to save face) outweigh the needs of the many.

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