Fairies Wear Boots Posted August 13, 2011 Share Posted August 13, 2011 On people thinking the housing market will go back to 15 - 25 percent rises each year. That's my experience talking to colleagues and debating with posters on EA Today. It's the media too. When house prices slumped and then got back to rising at a couple of percent per year, it was looked at as a good start but when do they get back to "normal" rises. As for Bernanke, not really sure why we are discussing him. America is having a very nice housing crash with Zirp. It's our currencies value, our inflation and interest rate that are interesting. Inflation way above target, they can't raise the base rate because it'll crash the housing market. Will it blow up in their faces? Probably, but how long will that take? The rate on a five year fix going down didn't fill me with confidence. Even thought about getting one. Though if the base rate is going to stay low, might as well get a cheaper floating mortgage and have more of it paid off in five years time. Quote Link to comment Share on other sites More sharing options...
Fairies Wear Boots Posted August 13, 2011 Share Posted August 13, 2011 it is simply because the money'd baby boomer property owners keep their spare cash in conservative investments which one way or another are invested in gilts so interest rates CAN stay low(ish), the value of money held in gilts will fall in real terms, as will the property wealth of the same people for what its worth, this means that house prices will correct slowly and in real terms, and a similar amount of boomer wealth will evaporate from their cash holdings we simpyl have to accept we may not buy houses during our entire lifetimes, and be better off for it With regards to interest rates staying low, our pound has dropped, therefore inflation on imported stuff has gone up. Mervyn King keeps on saying we can't do much about that. He's wrong of course they could defend our currency. What he meant to say is we can't do anything about that apart from raising rates that will destroy our housing market. There might come a time where they have to defend the pound. Quote Link to comment Share on other sites More sharing options...
Maynardgravy Posted August 13, 2011 Share Posted August 13, 2011 I keep seeing rising rents mentioned, but my previous rental has been empty for 2.5 of the last 4 years. On my current house I'm paying the same rent as I was in 2007. Even more astonishingly, I bought a house in early 1990s and the rental income was £850 pcm back then. Today the figure is almost exactly the same. This is S/E within 10 minutes of M3 Junc3, not some backwater part of England. Rent rises are a VI myth as far as I can see (from both sides of the fence, as a tenant and a landlord) Buckers This is true for me. been renting since 2007. started at 850 and now 825 for spacious 2 bed flat in pinner. rent rises are a myth here. Quote Link to comment Share on other sites More sharing options...
Si1 Posted August 13, 2011 Share Posted August 13, 2011 With regards to interest rates staying low, our pound has dropped, therefore inflation on imported stuff has gone up. Mervyn King keeps on saying we can't do much about that. He's wrong of course they could defend our currency. What he meant to say is we can't do anything about that apart from raising rates that will destroy our housing market. There might come a time where they have to defend the pound. no, they need to trash the pound in order to deflate real wages so as to promote an export led recovery right now, defending the £ is a bad idea for a long time AFAIK Quote Link to comment Share on other sites More sharing options...
7clubs Posted August 13, 2011 Author Share Posted August 13, 2011 On people thinking the housing market will go back to 15 - 25 percent rises each year. It's the media too. When house prices slumped and then got back to rising at a couple of percent per year, it was looked at as a good start but when do they get back to "normal" rises. As for Bernanke, not really sure why we are discussing him. America is having a very nice housing crash with Zirp. It's our currencies value, our inflation and interest rate that are interesting. Inflation way above target, they can't raise the base rate because it'll crash the housing market. Will it blow up in their faces? Probably, but how long will that take? The rate on a five year fix going down didn't fill me with confidence. Even thought about getting one. Though if the base rate is going to stay low, might as well get a cheaper floating mortgage and have more of it paid off in five years time. Fair comment. But surely history shows what's good for the goose etc.....Like it or not, the USA set our financial agenda - put it this way, do you think this pronouncement made Merv sweat? Do you see UK interest rates climbing significantly in the next 2 years and, by implication, beyond? Quote Link to comment Share on other sites More sharing options...
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