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Timak

If Interest Rates Remain At Close To 0%

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What do you think?

Well if they are held at close to 0% then inflation will continue to reduce people's spending power and eventually forced sellers will emerge.

But likewise if I were, say a teacher and knew I'd be on £35k ish for the next 20 years at least then borrowing £200k at 3% mortgage interest rate would seem reasonable.

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Not so long as there is uncontrolled immigration, huge SMI payouts so no one has to repay, and housing associations using taxpayers money to hoover up properties that appear 'affordable' thanks to low interest rates..

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Well if they are held at close to 0% then inflation will continue to reduce people's spending power and eventually forced sellers will emerge.

But likewise if I were, say a teacher and knew I'd be on £35k ish for the next 20 years at least then borrowing £200k at 3% mortgage interest rate would seem reasonable.

Do you have a link to this 20 year 3% fix?

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Well if they are held at close to 0% then inflation will continue to reduce people's spending power and eventually forced sellers will emerge.

But likewise if I were, say a teacher and knew I'd be on £35k ish for the next 20 years at least then borrowing £200k at 3% mortgage interest rate would seem reasonable.

+1

the only caveat is that to get the really low rates you need to have a big deposit.

the increasing cost of living will mean that fewer and fewer people will be able to save for one.

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Do you have a link to this 20 year 3% fix?

I'm not saying they exist I'm just saying most people only look at what they pay now. If ZIRP was pursued they might turn out to be the "lucky" ones.

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If prices are stagnant and inflation is increasing aren't we already having a real crash?

Edit for being Ed Balls and getting nominal and real confused.

Edited by interestrateripoff

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IF they stay at 0.5% i would still expect the affects of inflation to help push house prices down (impact in a static wage environment of higher living costs) – down circa 5-10% a year with 5% + RPI inflation. In the next 10 years it will be like Japan's lost decade but worse, far worse.

Don’t forget that there is a lot of personal debt on credit cards and unsecured loans where the IRs are going ever upwards.

That said we are presently in a BOE fools paradise, thinking that as a importing island nation with shite natural resources, naively and wrongly assuming that external Euro and indeed global factors will not possibly impact on BOE IR rates. Only takes one Black swan......

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If prices are stagnant and inflation is increasing aren't we already having a nominal crash?

As pointed out by many posters before, only if wages are also increasing at the same rate - which they aren't

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Seems inevitable that house prices will drop, whichever interest rate regime prevails.

We already know there are shedloads of mortgages in trouble, which banks are holding back repossesing, and rising costs of living vs wages seem likely to increase their numbers further. Add in LJAR's point above about saver's potency being eroded at the same time and you have a pretty crash-tastic scenario: houses up for sale with few being able to buy them. Plenty of the amateur landlords will not really be able to borrow to increase their portfolios as LTVs creep up. Ms Bell's thread from earlier today showed that auctions ain't a sure-fire route to sale either (and some of the stuff in the catalogue has been offered in prior auctions).

In my mind at least the conditions could hardly be better set for drops if you had a free hand, interest rates aside.

Edited by cheeznbreed

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As pointed out by many posters before, only if wages are also increasing at the same rate - which they aren't

If we have prices inflation without wage inflation, then house prices will crash as people stop being able to afford their mortgage payments.

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If we have prices inflation without wage inflation, then house prices will crash as people stop being able to afford their mortgage payments.

I don't disagree, however the question was "aren't we already having a nominal crash?"

The process you describe will take time, and likely to be more of a slow grind than the fast crash we'd like to see, IMO.

Of course, if when the BOE eventually raise rates, this process will get a mighty boost :)

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So I suppose the next question is what can the average person do to build up a large deposit, or protect existing savings in a deliberate period of low interest rates and high inflation?

Would low interest rates and high inflation always mean a weakening currency?

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Simple question....or is it?

If Interest rates are somehow able to be held at close to 0% will house prices crash?

No crash until rates rise, and this won't happen until the UK is downgraded. Until then, slow strangulation as now....

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Yes but the whole economy will crash not just houses. They are passed being able to stop it, its a case of really being dammed if they do and dammed if they dont. The BoE, Fed & ECB are already pushing on string. 0% will just slow up the train crash thats all.

You're forgetting the essential part, 0% enables the bankstas to stay in business and keep getting bonuses.

A huge crash, failed banks unrescued, unemployment at 25%, houses at 1992 prices, that's what should have happened, and we'd be competitive and coming out of it now.

Instead they bailed the banks and boiled(like frogs) the public.

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No crash until rates rise, and this won't happen until the UK is downgraded. Until then, slow strangulation as now....

Wrong, Wrong and.......Wrong

What we're going through is the final remnants of the 'spring bounce' that never happened.

Disposable income's being squeezed daily with petrol, food & utility costs rocketing, IR's are rapidly becoming a non issue.

An IR rise would accelerate the inevitable but give it a month or two and those £5k-£10k drops will turn into £20k-£30K drops as reality sets in and the first signs of panic set in.

It's game on from now on in.

OP, Just gag her and lock her in the under-stairs cupboard for a couple of months, you know it makes sense ;)

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In the next 10 years it will be like Japan's lost decade but worse, far worse.

We have already had a lost decade. A lost decade of the young living out of BTL, a lost decade of pensions and annuities going nowhere but down. In Dec 2009 the FTSE 100 was at 6900 pts, today it is languishing around 6000 pts. A lost decade of the terminally unemployed becoming unemployable and their children following in their footsteps. A lost decade of a widening gap between rich and poor, of increasing child poverty, of stagnating wages for the majority.

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We have already had a lost decade. A lost decade of the young living out of BTL, a lost decade of pensions and annuities going nowhere but down. In Dec 2009 the FTSE 100 was at 6900 pts, today it is languishing around 6000 pts. A lost decade of the terminally unemployed becoming unemployable and their children following in their footsteps. A lost decade of a widening gap between rich and poor, of increasing child poverty, of stagnating wages for the majority.

Nu Labour, same old, same old

:blink:

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You're forgetting the essential part, 0% enables the bankstas to stay in business and keep getting bonuses.

A huge crash, failed banks unrescued, unemployment at 25%, houses at 1992 prices, that's what should have happened, and we'd be competitive and coming out of it now.

Instead they bailed the banks and boiled(like frogs) the public.

To an extent we've recovered some competitiveness. Wage levels have actually fallen by 20-35% in the IT contract field. And judging by the number of foreign shoppers still flocking to Oxford Street (aka hell on Earth) then our retail shops are extremely competitive. Of course this is down to the fall in the pound against Euro using countries, but it's still (currently) real.

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To an extent we've recovered some competitiveness. Wage levels have actually fallen by 20-35% in the IT contract field. And judging by the number of foreign shoppers still flocking to Oxford Street (aka hell on Earth) then our retail shops are extremely competitive. Of course this is down to the fall in the pound against Euro using countries, but it's still (currently) real.

only about another 50% to depreciate in IT then and the UK will be competitive

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  • 276 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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