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Qe & 1.5 % Drop In House Prices?


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QE has stopped and house prices have dropped. Is it coincidence or consequence?

Or is it to early for the 2 to tie up?

I thought that the Special Liquidity Scheme and Credit Guarantee Scheme had more direct impact on feeding the property (mortgage) market rather than QE and both these are winding down with Mervyn King saying there is no chance of them being restarted + the Banks need to repay the £300bn that the SLS and CGS provided by 2012 and 2014.

Interesting to note, however, that in 2007 when house prices started their fall then the Base Interest Rate was at about 5.5% but this time it is at 0.5% - this must be a big worry for Estate Agents.

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QE has stopped and house prices have dropped. Is it coincidence or consequence?

Or is it to early for the 2 to tie up?

Far too early I think. QE largely a form of devaluation (I think) and not directly impacting on house prices.

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I thought that the Special Liquidity Scheme and Credit Guarantee Scheme had more direct impact on feeding the property (mortgage) market rather than QE and both these are winding down with Mervyn King saying there is no chance of them being restarted + the Banks need to repay the £300bn that the SLS and CGS provided by 2012 and 2014.

Yeah, right.

He will change his tune when it suits him/the string pullers.

eg further house price falls causing a systemic threat to the banks' survival... again.

Maybe they will change the name to 'Liquidity scheme of specialness' or something. That will fool the dumb proles, works every time.

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Yeah, right.

He will change his tune when it suits him/the string pullers.

eg further house price falls causing a systemic threat to the banks' survival... again.

Maybe they will change the name to 'Liquidity scheme of specialness' or something. That will fool the dumb proles, works every time.

The thinking is that the free money given to the banks and mortgage payers will cushion the effect of further house price falls. Repair of bank balance sheets via QE and mortgage holders paying off debt thanks to low IR's is supposed to prevent the next crisis caused by the coming 20% fall in house prices once the free money stops and IR's rise.

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I thought that the Special Liquidity Scheme and Credit Guarantee Scheme had more direct impact on feeding the property (mortgage) market rather than QE and both these are winding down with Mervyn King saying there is no chance of them being restarted

3 gold stars there Alfie. SLS and CGS were quite literally propping up the mortgage market. Without them, there isn't enough credit to go round.

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I thought that the Special Liquidity Scheme and Credit Guarantee Scheme had more direct impact on feeding the property (mortgage) market rather than QE and both these are winding down with Mervyn King saying there is no chance of them being restarted + the Banks need to repay the £300bn that the SLS and CGS provided by 2012 and 2014.

Interesting to note, however, that in 2007 when house prices started their fall then the Base Interest Rate was at about 5.5% but this time it is at 0.5% - this must be a big worry for Estate Agents.

Yep, the SLS has had the most direct effect ie it has provided the banks with cheap accesible funds which were suddenly withdrawn when the wholesale money markets dried up. I think it unlikely to be restarted given the need for austerity whoever comes into power. So the upshot is that borrowing money will be more expensive and banks will be even more choosey about who they lend to.

Although the base rate has dropped to 0.5%, actual mortgage repayments have not dropped that much on average due to SVRs increasing so much; this at a time of high long-term unemployment does not bode well for hpi and like you say the kitchen sink has been thrown but market forces are reasserting themselves and their is little else that the VIs can do.

Crash position assumed ;)

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