Avalanche Of Bearish News In The Telegraph

[Tired of Waiting]

Avalanche of bearish news in the Telegraph

I don't remember so many bearish news in one single day before in The Telegraph.

Personal Finance

Interest rates 'will have to rise sixfold in two years'

Interest rates will have to rise almost sixfold over the next two years to cope with rising inflation, business leaders have warned.

http://www.telegraph.co.uk/finance/personalfinance/8212723/Interest-rates-will-have-to-rise-sixfold-in-two-years.html

Mortgages

3m home owners could 'struggle to pay mortgage'

An estimated 3m home owners could struggle to pay their mortgage if interest rates rise in line with predictions from the Confederation of British Industry.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8214361/CBI-interest-rate-forecast-3m-home-owners-could-struggle-to-pay-mortgage.html

Personal Finance

House prices 'to drop seven per cent next year'

House prices will drop seven per cent next year, economists predict, as the freeze on mortgages continues.

http://www.telegraph.co.uk/finance/personalfinance/8214127/House-prices-to-drop-seven-per-cent-next-year.html

Mortgages

How to keep your mortgage affordable

If future interest rate rises could leave you struggling to repay your mortgage, you need to take steps now to protect what is probably your biggest asset.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8214356/CBI-interest-rate-forecast-How-to-keep-your-mortgage-affordable.html

Mortgages

The best fixed-rate mortgage deals

If you are worried that rising interest rates will make your mortgage unaffordable, it may be best to switch to a fixed-rate loan now.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8214456/CBI-interest-rate-forecast-the-best-mortgage-deals.html

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Edited December 20, 2010 by Tired of Waiting

[Guest_ringledman_*]

Avalanche of bearish news in the Telegraph

I don't remember so many bearish news in one single day before in The Telegraph.

And the stock market continues to climb.

Just goes to show how joe public and the mainstream press's view is so out of whack to the markets.

Once joe public and the press are bullish on everything then will be the time to sell all risk assets.

Edited December 20, 2010 by ringledman

[Mikhail Liebenstein]

And the stock market continues to climb.

Just goes to show how joe public and the mainstream press's view is so out of whack to the markets.

Once joe public and the press are bullish on everything then will be the time to sell all risk assets.

Interest rates can't rise as it would destroy the banks. What they want is ultra cheap central bank cash and higher market rates so they benefit from the spread.

[Sledgehead]

And the stock market continues to climb.

Just goes to show how joe public and the mainstream press's view is so out of whack to the markets.

Not sure anyone in the markets is being particularly "contrary" here. Every time King et al tell us that borrowers face a risk from rising rates, I read it thus, as I'm sure the markets do : "This is King et al's excuse to savers and inflation watchers for not putting up rates."

The day they tell you nobody is at risk from rising rates is the day they have no excuses and thus no choice but to put rates up.

Once joe public and the press are bullish on everything then will be the time to sell all risk assets.

Can't disagree with that.

Edited December 20, 2010 by Sledgehead

[Peter Hun]

And the stock market continues to climb.

Just goes to show how joe public and the mainstream press's view is so out of whack to the markets.

Once joe public and the press are bullish on everything then will be the time to sell all risk assets.

The stock market is going up because its an inflation hedge, like gold but it actually produces an inflation proof return every year.

Jo Public has little to do with the rise, its institutional investors getting away from Fixed Interest Bonds.

Edited December 20, 2010 by Peter Hun

[Timm]

Avalanche of bearish news in the Telegraph

Forget the BearWave:

It's like a BearTsunami!

[erranta]

Interest rates can't rise as it would destroy the banks. What they want is ultra cheap central bank cash and higher market rates so they benefit from the spread.

Exactly - this is one way they are covertly, desperately trying to pay off the toxics that keep on exploding & they have on their hands without discovery by others.

[exiges]

you need to take steps now to protect what is probably your biggest asset.

Liability, shirley ?

[Tired of Waiting]

Interest rates can't rise as it would destroy the banks. What they want is ultra cheap central bank cash and higher market rates so they benefit from the spread.

We had a discussion about that, here: http://www.housepricecrash.co.uk/forum/index.php?showtopic=156469&view=findpost&p=2829010

[Tired of Waiting]

Liability, shirley ?

[thecrashingisles]

Forget the BearWave:

It's like a BearTsunami!

[R K]

Desperate for hits before they disappear forever behind their paywall.

[Arbitrage]

Exactly - this is one way they are covertly, desperately trying to pay off the toxics that keep on exploding & they have on their hands without discovery by others.

+several

[pl1]

So rising to 3%? That's hardly a ballbusting rise really.

[Timm]

The really funny thing is how the genuinely bullish stories don't get any exposure in the media at all.

Of course I'm not going to share them - I have a bearish VI.

[Harry Monk]

Desperate for hits before they disappear forever behind their paywall.

Are they definitely doing that, I thought they were still undecided?

[foxy]

So rising to 3%? That's hardly a ballbusting rise really.

With a BOE rate of 3% what will SVRs be?

[Harry Monk]

So rising to 3%? That's hardly a ballbusting rise really.

It's rising sixfold, and who's to say it won't rise sixfold again after that? It will definitely be a major consideration to anybody thinking of buying property.

[Si1]

more to the point - what are REAL IRs?

If current CPI inflation is, what, 3.3%, and base IR 0.5%, then that is negative IR of -2.8% against CPI.

If IR raises to 3% and inflation eases off to within its target at CPI 2%, then this turns into a positive IR of 1%. this is a swing in real interest rates of 3.8%, or (minus) -138% shift, which is very large.

[Riedquat]

It's rising sixfold, and who's to say it won't rise sixfold again after that? It will definitely be a major consideration to anybody thinking of buying property.

Because rises are more likely to be absolute rather than relative. Paint it that way and any rise is to be looked on with such horror because starting from such a low level it's easy to make a big multiple. 0.5% to 3% must surely be far more likely than 3% to 18% - at least until the weight of all the accumulated stupidity really hits.

[Guest_ringledman_*]

more to the point - what are REAL IRs?

If current CPI inflation is, what, 3.3%, and base IR 0.5%, then that is negative IR of -2.8% against CPI.

If IR raises to 3% and inflation eases off to within its target at CPI 2%, then this turns into a positive IR of 1%. this is a swing in real interest rates of 3.8%, or (minus) -138% shift, which is very large.

Si, they will allways be negative, at least for the next 5-10 years.

The government won't change this policy as they will let the banks recapitalise by stealing from savers for as long as it takes.

As the legend says in my signature, inflation will always be higher than the bank rate for years to come.

[NEO72]

With a BOE rate of 3% what will SVRs be?

Well average SVR is around 4.7% with BR of 0.5, so I would say it will be...unpleasant

Of course, this is assuming that SVRs rise proportionally to base rates - since the special liquidity scheme is coming to an end, the banks may decide to turn the screws on all those stuck on SVRs, who knows...

Oh and to anyone who comes out with the mantra 'but IRs were in double figures in the early 90's' I would say also that those higher IRs related to much lower value mortgages.

[athom]

So rising to 3%? That's hardly a ballbusting rise really.

no but i can't think of a more bearish way to put it than "6 fold rise". The Telegraph is always on the bearish side but that's really stressing the point.

only problem though is the flood of other distracting stories and peoples ability to see just what is comfortable to see and nothing more

[MrPin]

Are they definitely doing that, I thought they were still undecided?

I hope not!

I'd have to go to the library, and read it for nothing there instead!

[Si1]

Si, they will allways be negative, at least for the next 5-10 years.

The government won't change this policy as they will let the banks recapitalise by stealing from savers for as long as it takes.

As the legend says in my signature, inflation will always be higher than the bank rate for years to come.

makes sense

at the same time this supports high house prices, or rather gradual long term price falls, over the medium term

short term shocks from each nominal rise might lead to some sizeable little house price falls, however these may not last, much like recenty years...possibly??

Edited December 21, 2010 by Si1