Jump to content
House Price Crash Forum
nohpc

Interest Rates

Recommended Posts

All I see is many reasons that rates will stay low.

The main reason being that the over indebted public would go bust in massive numbers if rates were to go up even a little bit.

Think tanks talking about rates of 8% are detached from reality. All you have to do is picture what rates of 8% would do to the average UKer to know that it is just not a possibility.

There will be no tax cuts. Public spending is being slashed. House prices are dropping. The stock market is faltering. Worldwide growth rates are being revised downwards. A weak pound is seen as "desirable" to increase competetiveness.

The fly in the ointment is food price inflation but this is cost push inflation and raising interest rates would not help this in the slightest bit.

Likewise helping savers with higher interest rates would do nothing to boost the economy. Savers have paid off their mortgages, possibly retired and have money aside to boot. They are not exactly struggling and are unlikely to spend the money they earn on savings interest.

Savers save. Borrowers spend.

Can't think of anything else just now.

Share this post


Link to post
Share on other sites

In terms of mortgages, it seems quite unfair that many of the borrowers who stretched themselves with self assessment mortgages a few years back managed to get deals at below-base-rate levels such that some are still paying nominal amounts of money on their mortgages on their albeit nequitied property. However, I can't help but agree that a big shift in base rate will cause massive problems with the economies as the number of repos increases and the banks lose billions more.

Our only hope is that the debts get inflated away before that happens. As many people have already noted in the last HPC, the prices themselves shifted very little, it was inflation that came to the rescue. I think this is likely to be our saviour again.

Whether or not 10% YoY inflation is possible with 0.5% base rates remains to be seen.

Share this post


Link to post
Share on other sites

All I see is many reasons that rates will stay low.

The main reason being that the over indebted public would go bust in massive numbers if rates were to go up even a little bit.

Think tanks talking about rates of 8% are detached from reality. All you have to do is picture what rates of 8% would do to the average UKer to know that it is just not a possibility.

There will be no tax cuts. Public spending is being slashed. House prices are dropping. The stock market is faltering. Worldwide growth rates are being revised downwards. A weak pound is seen as "desirable" to increase competetiveness.

The fly in the ointment is food price inflation but this is cost push inflation and raising interest rates would not help this in the slightest bit.

Likewise helping savers with higher interest rates would do nothing to boost the economy. Savers have paid off their mortgages, possibly retired and have money aside to boot. They are not exactly struggling and are unlikely to spend the money they earn on savings interest.

Savers save. Borrowers spend.

Can't think of anything else just now.

So even if inflation was rampant interest rates would stay at current levels? Seems unlikely.

Edited by cockrobin

Share this post


Link to post
Share on other sites

Banks use savers money for their reserves and every day operations.

If savers are getting SFA for lending to the Banks and move into other investment where would that leave the Banks?

It is estimated that the Banks hold £1 trillion of saver`s money. ;)

Share this post


Link to post
Share on other sites

So even if inflation was rampant interest rates would stay at current levels? Seems unlikely.

I dunno I caught a segment of BBC news whereby somebody said inflation doesn't matter at all! We must get the ecoomy started again..... which is nuts..... they are going for hyper its all part of the plan.

Share this post


Link to post
Share on other sites

All I see is many reasons that rates will stay low.

The main reason being that the over indebted public would go bust in massive numbers if rates were to go up even a little bit.

Think tanks talking about rates of 8% are detached from reality. All you have to do is picture what rates of 8% would do to the average UKer to know that it is just not a possibility.

There will be no tax cuts. Public spending is being slashed. House prices are dropping. The stock market is faltering. Worldwide growth rates are being revised downwards. A weak pound is seen as "desirable" to increase competetiveness.

The fly in the ointment is food price inflation but this is cost push inflation and raising interest rates would not help this in the slightest bit.

Likewise helping savers with higher interest rates would do nothing to boost the economy. Savers have paid off their mortgages, possibly retired and have money aside to boot. They are not exactly struggling and are unlikely to spend the money they earn on savings interest.

Savers save. Borrowers spend.

Can't think of anything else just now.

Read BOE Deputy Govenor Bean's latest speach. He said that due to the BOE actions they saved the financiual markets, not you or me, the Finacial Markets, which means they are doing this for them and not you. Once they feel the financial markets are safe; good luck borrowers as they don't care a thing about you and can turn fantatstic profits on your misery, making the financial markets even more money. 8% base rate would earn a fortune on the futures market. Steady share prices means low profits for the financial markets, share prices that go up and down and even crash = HUGE PROFITS for the financial markets.

You think the BOE care about you and if you will loose your house, what is life like on cloud cukoo?

Share this post


Link to post
Share on other sites

I dunno I caught a segment of BBC news whereby somebody said inflation doesn't matter at all! We must get the ecoomy started again..... which is nuts..... they are going for hyper its all part of the plan.

RUINED!!

Share this post


Link to post
Share on other sites
Think tanks talking about rates of 8% are detached from reality. All you have to do is picture what rates of 8% would do to the average UKer to know that it is just not a possibility.

Out of the total UK population...how many voters would be quite happy with 8%? I certainly would, all of the "boomers" would, FTBers would he happy if it meant tons of repos coming onto the market - in fact, anyone who is not over extended on their mortgage would be happy, which is actually quite a small segment of the population. Noisy, but small.

Share this post


Link to post
Share on other sites

All I see is many reasons that rates will stay low.

The main reason being that the over indebted public would go bust in massive numbers if rates were to go up even a little bit.

Think tanks talking about rates of 8% are detached from reality. All you have to do is picture what rates of 8% would do to the average UKer to know that it is just not a possibility.

There will be no tax cuts. Public spending is being slashed. House prices are dropping. The stock market is faltering. Worldwide growth rates are being revised downwards. A weak pound is seen as "desirable" to increase competetiveness.

The fly in the ointment is food price inflation but this is cost push inflation and raising interest rates would not help this in the slightest bit.

Likewise helping savers with higher interest rates would do nothing to boost the economy. Savers have paid off their mortgages, possibly retired and have money aside to boot. They are not exactly struggling and are unlikely to spend the money they earn on savings interest.

Savers save. Borrowers spend.

Can't think of anything else just now.

Ok- but there is a alternative scenario-

if the £ falls too fast or/and too low then rates may need to rise to cushion or support,

and if food prices rise too fast a stronger £ and hence the req'd greater interest rate may lessen the severity.

Share this post


Link to post
Share on other sites

Ok- but there is a alternative scenario-

if the £ falls too fast or/and too low then rates may need to rise to cushion or support,

and if food prices rise too fast a stronger £ and hence the req'd greater interest rate may lessen the severity.

Nah food prices can be hidden as they have been hidden...

For example the 8p noodles I used to buy instead of being 398cals per pack are now 378cals per pack which is very hard to notice. More and more saw dust gets put in burgers bread and water added to milk so it is almost invisible. A bottle of barbecue sauce I had was so watery it was almost like cordial... The cordial I buy needs 3 times as much put in it and noticibly the frozen veg is more broken mush of undentified green stuff than veg these days.

Thus the inflation fraud will continue.

Share this post


Link to post
Share on other sites
Interest Rates Might never go above 1% again

Don't be ridiculous.

As with all economic cycles, inflation will go up and down, IR will go up and down and exchange rates will go up and down.

Interest Rates might never be 1% again would be a more valid subtitle than the one you have chosen.

Share this post


Link to post
Share on other sites

Excellent forecasting the future.

What will happen in the future no one can really predict.

However if they can somehow prevent a sovereign default etc... and they can keep this charade going then central bank rates probably won't go anywhere for a long time.

However there are too many variable to say with any degree of certainty what will actually happen.

Place your money and make your bets.

It's all just too random.

Share this post


Link to post
Share on other sites

Seems 100% certain to me.

The only, and I say again the ONLY reason they will raise IRs is if there is a run on the currency.

+1

The current BOE rate was supposed to be for an emergency period only - it is now nearly 2 years.

Only a run on the Pound will cause them to raise rates.

Share this post


Link to post
Share on other sites

However if they can somehow prevent a sovereign default etc... and they can keep this charade going then central bank rates probably won't go anywhere for a long time.

However there are too many variable to say with any degree of certainty what will actually happen.

^This. I don't think anyone can do better at prediction than this

Share this post


Link to post
Share on other sites
Guest BetterOffOnBenefits

If holding rates at rock bottom for an eternity causes no harm, why didn't they always does it?

Share this post


Link to post
Share on other sites

Excellent forecasting the future.

What will happen in the future no one can really predict.

However if they can somehow prevent a sovereign default etc... and they can keep this charade going then central bank rates probably won't go anywhere for a long time.

However there are too many variable to say with any degree of certainty what will actually happen.

Place your money and make your bets.

It's all just too random.

Well yes, it's the 64 million dollar question isn't it? (or is that 64 trillion?). When rates went down to as low as they are now, it all made sense what was posted on here that if rates were that low and inflation was higher, then government bonds and stuff wouldn't be wanted and they would have to put up the base rate. But over what time frame this happens I have no idea. As we've had ZIRP for ages and over target inflation too.

Any ideas why they will have to raise the base rate?

Share this post


Link to post
Share on other sites

If holding rates at rock bottom for an eternity causes no harm, why didn't they always does it?

Cos in a functional economy it's hugely inflationary, and if just one country does it it trashes the currency

These are not normal times, and the action is co-ordinated

Share this post


Link to post
Share on other sites

Seems 100% certain to me.

The only, and I say again the ONLY reason they will raise IRs is if there is a run on the currency.

They will go above 1% within the next few years, its not good for the economy for them to stay too low for too long and Merv knows it.

Share this post


Link to post
Share on other sites

If inflation gets hold by means of wages increasing to match price increases then those who finance the UK's borrowing will demand higher levels of interest. In other words, keeping interest rates below 1% if inflation becomes entrenched will be impossible.

Share this post


Link to post
Share on other sites

If inflation gets hold by means of wages increasing to match price increases then those who finance the UK's borrowing will demand higher levels of interest. In other words, keeping interest rates below 1% if inflation becomes entrenched will be impossible.

wages ain't gonna increase though. If they do then higher rates willbe better tolerated

Share this post


Link to post
Share on other sites

Well yes, it's the 64 million dollar question isn't it? (or is that 64 trillion?). When rates went down to as low as they are now, it all made sense what was posted on here that if rates were that low and inflation was higher, then government bonds and stuff wouldn't be wanted and they would have to put up the base rate. But over what time frame this happens I have no idea. As we've had ZIRP for ages and over target inflation too.

Any ideas why they will have to raise the base rate?

That's what I call inflation. The US quiz show of the 1960s was the $64,000 question..A Ford Mustang was about a grand then.

Share this post


Link to post
Share on other sites

Someone answer this question please.

HSBC are offering 2.19% on mortgage with 60% LTV. That's even tempting to me!

I've also seen 2.79% fixed until end 2012. 60% also.

Till 2012 is not long though - 2 years. What happens is IRs are much higher when that deal comes to an end?

Share this post


Link to post
Share on other sites

wages ain't gonna increase though. If they do then higher rates willbe better tolerated

Which is why I expect lower house prices in the UK. Either wages rise to match inflation and interest rates rise (buying a house becomes less affordable) or wages fail to match inflation and interest rates stay low (buying a house becomes less affordable).

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.