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The Masked Tulip

Interest Rates Set To Rise As Economy Recovers

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Hmmmmm, am now more convinced that rates will not rise for some time.

When the media talk about inflation/deflation it is to mask the truth. Anyone for a descent correction in the markets coming soon?

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I doubt it. Strange that a rise would be seen as a victory for government.

The NuLab extension of SMI has been continued until 2012 (qualifying mortgages stay at £200k, rather than going back to £100k), so the coalition is very sensitive to overleveraged borrowing in the low end of the housing market. But they've also cut SMI rates almost by half.

What would a rise in the base rate do to this scheme? By keeping the £200k limit do they reckon the carnage will be minimised?

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Interest rates are going to rise? Brilliant news!

Roll on house price crash carnage, failing businesses (brought down by spiralling debt costs), collapsing banks (due to bad mortgage and business debt) and a govt. so wrecked by a sovereign debt crisis (again due to spiralling debt costs) that it can't bail out the banks again, and the demise of the pound.

Jolly good, I'm ready and waiting :ph34r:

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Roll on house price crash carnage, failing businesses (brought down by spiralling debt costs),

I understand private businesses are pretty cash-positive these days

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Interest rates are going to rise? Brilliant news!

Roll on house price crash carnage, failing businesses (brought down by spiralling debt costs), collapsing banks (due to bad mortgage and business debt) and a govt. so wrecked by a sovereign debt crisis (again due to spiralling debt costs) that it can't bail out the banks again, and the demise of the pound.

Jolly good, I'm ready and waiting :ph34r:

You forgot a govt. so wrecked that it can't win a second term. A rise of anything more than 2% or maybe even less is political suicide and therefore it will not happen.

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I doubt it. Strange that a rise would be seen as a victory for government.

It would be **SEEN AS** a rise if they managed to get some spin doctors to actually present it as returning to a normal healthy economy rather than what Gordon created.

The problem I have with the article is the assumption that the UK economy will recover any time soon.

Asia and latin America are now booming again, Europe is doing OK in part on German-French-Italian exports to booming countries , UK and US have the same mess they had before because the fundamentals haven't been fixed.

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so there will be some surge of house buyers now..

1. once interest rises, less people to take mortgage..

2. VAT increase from Jan.. so might increase house price again..

How will exchange rate behave ? i meant GBP to USD..

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We can only hope this is true, we need to get away from such low rates fast before we become addicted. Two 0.25% rises in the next 6-12 months will barely be noticed. Much better to do that than a 1-1.5% in one go.

It will probably take 5-10 years to get rates back to the 5% average. Even if they start raising now interest rates will be 1-2% ish by end of 2011 maybe 3% by the end of 2012. Hardly apocalyptic.

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Considering all the major economies are at low rates isn't there a risk with increasing interest rates of hot money flowing into the UK for the higher return which will cause even higher inflation?

If there isn't an inflow of cash you then run the risk of increasing defaults amongst borrowers.

Still I'm sure the experts at the BoE know what they are doing, after all they do have an amazing track record.

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so there will be some surge of house buyers now..

1. once interest rises, less people to take mortgage..

2. VAT increase from Jan.. so might increase house price again..

How will exchange rate behave ? i meant GBP to USD..

No, no and no

Why would there be a surge of house buyers? House buying requires a mortgage, so a lack of mortgages will lower house prices due to sellers as a whole being unable to match asking prices. VAT increase will reduce people's disposable income, again reducing the amount that can be spent on housing.

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Hmmmmm, am now more convinced that rates will not rise for some time.

When the media talk about inflation/deflation it is to mask the truth. Anyone for a descent correction in the markets coming soon?

I'm so stupid that I don't understand why the better-than-expected GDP yesterday caused the FTSE to drop, and it's not doing all that well today either! :unsure:

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I'm so stupid that I don't understand why the better-than-expected GDP yesterday caused the FTSE to drop, and it's not doing all that well today either! :unsure:

Less chance of QE2. More chance of interest rate rises. Ergo less free money, less inflation.

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Interest rates are going to rise? Brilliant news!

Roll on house price crash carnage, failing businesses (brought down by spiralling debt costs), collapsing banks (due to bad mortgage and business debt) and a govt. so wrecked by a sovereign debt crisis (again due to spiralling debt costs) that it can't bail out the banks again, and the demise of the pound.

Jolly good, I'm ready and waiting :ph34r:

businesses relying on debt to stay afloat are just a drain.

let them go.

unborrowed business will flourish....and according to many pundits, many businesses are cash rich.

and why bail any more banks...the cascade failure is a myth, and again, they are a drain that needs to be plugged.

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Less chance of QE2. More chance of interest rate rises. Ergo less free money, less inflation.

I see.

This is the sort of thing that amazes me -- the market sees actual evidence of growth as being bad, and certainly worse than the possibility of future false/stimulated growth...

I really don't understand humans! ;)

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I see.

This is the sort of thing that amazes me -- the market sees actual evidence of growth as being bad, and certainly worse than the possibility of future false/stimulated growth...

I really don't understand humans! ;)

you dont...free money is not the sign of a healthy economy...its free or near free BECAUSE they see a shortage of the stuff......ie, lending has flattened.

every time this has happened, they stoke the false demand with lower interest rates to encourage borrowing and less saving.

We are now at the point where rates are as low as they can go.....no more stimulus available..

what we need now is an increase in savings, so that sensible investments, and therefore wealth creation, can be attained. we are in the BUST phase of Austrian theory of economics. There is no escape until savings increase.

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what we need now is an increase in savings, so that sensible investments, and therefore wealth creation, can be attained. we are in the BUST phase of Austrian theory of economics. There is no escape until savings increase.

Well, I'm doing my bit! :D

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I see.

This is the sort of thing that amazes me -- the market sees actual evidence of growth as being bad, and certainly worse than the possibility of future false/stimulated growth...

I really don't understand humans! ;)

Someone explained something to me about the FX markets the other day. There was like 6 levels of indirection in the assumed effects.

Rising GDP > less chance of QE > less inflation > lower bond yields > more crusty dog turds > higher bond prices > lower FTSE > gordon brown smells like cheese > lower pound > lower GBP = STACK OVERFLOW - STEM ABORT!!!!"£!"2134!$"DF!

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I see.

This is the sort of thing that amazes me -- the market sees actual evidence of growth as being bad, and certainly worse than the possibility of future false/stimulated growth...

I really don't understand humans! ;)

Well a media headline would argue that the FTSE has been rallying the last 3 months on expectation of a pickup and on announcement there is profit taking (sell the news) had it gone up they would change that to Strong rally based on GDP data (they will basically fit opinion to the outcome of event which is as useful for understanding as a chocolate teapot , In reality it shows the futile nature of trying to understand/forecast market direction based on news/events because in reality it is impossible to interpret how the market will view a piece of news at any given market on any given day, there is far too much collective psychology involved to make a basic interpretation and be sure you are correct, this is something that RB classically seems to really struggle with despite spending more time it seems looking at markets than a daytrader and therefore always finds himself pinged around all over the place.

Edited by Tamara De Lempicka

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businesses relying on debt to stay afloat are just a drain.

let them go.

unborrowed business will flourish....and according to many pundits, many businesses are cash rich.

and why bail any more banks...the cascade failure is a myth, and again, they are a drain that needs to be plugged.

Why bail any more banks? Because the people who run them, who went to school and university with the politicians, tell the said politicos that the UK can't afford for its financial sector to fail.

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  • 261 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%



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