Jump to content
House Price Crash Forum

Markets Expect Interest Rate Cut And No Increase To 0.75% Until April 2017


Recommended Posts

Of course, with inflation striking at borrowing power...the driver of asset prices...the only course open is to lower interest rates...this has been the way of "controlling" the economy for the last 30 years....lower rates...increases spending and makes the economy grow,

FAst forward to today, and the interest rate tool is maxed out, and even as posters suggest your buying power of everyday items has decreased by 30%, asset prices are tipped to fall again, the only way out being to yet again lower rates.

As a poster pointed out, an already stupidly cheap loan becomes even more stupidly cheap, this doesnt help that particular lender at all.

New loans are getting rarer and rarer and more expensive.

the pincer movement on house prices is about to complete....expensive borrowing and reduced repayment power.

The Central banks, wishing to preserve banks, have nowhere to turn to, other than talk of further inflationary action.

The writing is on the wall, regardless of how little your mortgage is costing for the small number with Base+ .5% and in some cases, Base Minus, the cost of new borrowing, which determines prices, is rising, so while you may be "saving" on the monthly cost, that house is no longer earning anything through capital gain.

We now have a £150-160BN deficit....tax rises and job losses are built in the future....a collapse is going to occur...worse now than if they had let it happen in 2007.

Next up is longer and longer mortgage terms. Try keep the payments lower by spreading them over a longer period. Net result the lender is happy because the total mortgage interest they receive is much higher.

Latest Nationwide figures said average mortgage term up from 25 years to 28 years. Shapps Newbuy and Firstbuy debt deferring ponzi schemes have terms up to 52 years. Paying the mortgage off before retirement is going to be a thing of the past. Then it's straight into equity release for food because the pensions will be worthless.

Link to post
Share on other sites
  • Replies 53
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Thinking about it, those things will be mostly covered by by our (index linked) state pensions, when we reach state pension age. In the meantime, they are still adequately covered by my personal pension annuity.

Wow - you really think food, petrol etc has been increasing in price at an annualised compound rate of 3% (or whatever the CPI/RPI lie numbers say)?

No way - the nominal income of pensioners has increased, but nowhere near in line with the real rate of inflation

Do you believe that the government has been calculating inflation honestly?

Really??????????????

QE has supported asset prices - so no real deflation there, sadly. Houses in my neck of the woods (Surrey) cost slightly more than they did in 07

Link to post
Share on other sites

Wow - you really think food, petrol etc has been increasing in price at an annualised compound rate of 3% (or whatever the CPI/RPI lie numbers say)?

No way - the nominal income of pensioners has increased, but nowhere near in line with the real rate of inflation

Do you believe that the government has been calculating inflation honestly?

Really??????????????

QE has supported asset prices - so no real deflation there, sadly. Houses in my neck of the woods (Surrey) cost slightly more than they did in 07

They re-linked pensions to CPI instead of RPI IIRC. CPI is lower than RPI and they are both b0ll0cks.

As per my graphs above, if you are expecting pensions to be delivering in 2032 either:

* they re-linked it again to a new index way lower than RPI or CPI

* they have openly enslaved the young and ramped up immigration way beyond anything seen before

* aliens landed and gave us their technology

edit: show my b0ll0cks

Edited by bmf
Link to post
Share on other sites

Thinking about it, those things will be mostly covered by by our (index linked) state pensions, when we reach state pension age. In the meantime, they are still adequately covered by my personal pension annuity.

Seeing as most people don't retire until they receive their state pension, they don't have to worry about day to day inflation, their savings are left for asset and "big ticket item" purchases and asset and "big ticket item" prices are deflating.

Pensions switched from RPI to CPI

If we look back over the 15 years since CPI was introduced, the cumulative inflation rate shown by RPI since 1996 is 53.6% while that for CPI is 35.6%

http://www.significancemagazine.org/details/webexclusive/1314363/RPI-versus-CPI---The-Definitive-Account.html

Link to post
Share on other sites

Wow - you really think food, petrol etc has been increasing in price at an annualised compound rate of 3% (or whatever the CPI/RPI lie numbers say)?

No way - the nominal income of pensioners has increased, but nowhere near in line with the real rate of inflation

Do you believe that the government has been calculating inflation honestly?

Really??????????????

QE has supported asset prices - so no real deflation there, sadly. Houses in my neck of the woods (Surrey) cost slightly more than they did in 07

Quite frankly, food, petrol etc is such a small proportion of my annual spend that I couldn't give a damn.

The apartments I rent, in France and Spain, are getting cheaper each year, the rent on my UK house has been static for the last four years and the cash I have set aside for a house is appreciating each year.

Link to post
Share on other sites
they happily enjoy that unfair advantage and even boast about it as if it they deserved any of it
As much as I despise the financial system I have accepted that I cannot change it and have used it to my advantage - buying a London flat in 2004 (when all on this site advised me against doing so), using the profit to move up the ladder to a nice house in a good area of North London a few years later and taking out a BOE +0.6% lifetime tracker just before interest rates were smashed. I hope the next move will be down again - the current rate saves me a lot of interest but you can never save enough interest - what we save is almost pays for our son's school fees.

Pot, kettle...... :lol::lol::lol:

Link to post
Share on other sites

Since 2006 petrol, food, electricity are all up 30% plus measured in fiat terms. That means your stash of cash only has 70% of its previous purchasing power

Suppose that £1 buys G units of goods. If the price of those goods rises by 30% then £1 buys G/1.3 = 0.77G units. This is a 23% decline in the purchasing power of the £.

In general, if prices rise by x% in a certain currency then this equates to a decline of y% in the purchasing power of that currency where x and y are related by:

(1+x/100)(1-y/100) = 1

Link to post
Share on other sites

Quite frankly, food, petrol etc is such a small proportion of my annual spend that I couldn't give a damn.

The apartments I rent, in France and Spain, are getting cheaper each year, the rent on my UK house has been static for the last four years and the cash I have set aside for a house is appreciating each year.

I get your point about food costs vs rent, but isn't the state pension just supposed to cover food and heating/gas/electric? So saying your rent costs are more significant doesn't enter into this equation.

Meanwhile CPI is working it's magic.

Link to post
Share on other sites

I get your point about food costs vs rent, but isn't the state pension just supposed to cover food and heating/gas/electric? So saying your rent costs are more significant doesn't enter into this equation.

Meanwhile CPI is working it's magic.

I haven't got a clue what it's supposed to cover. What I do know is that I paid about 25% of my salary (employers + employees) in National Insurance contributions during my working life and in return, some eight years after I retired, I will be entitled to a meagre pension that will probably cover day to day food and things (or a reasonable bottle of wine a week) but is certainly not enough for me to live on, but thankfully, because I provided for my retirement, I don't need to. It is sort of indexed linked though, either RPI or CPI whichever is currently lower, isn't it?

Link to post
Share on other sites

I haven't got a clue what it's supposed to cover. What I do know is that I paid about 25% of my salary (employers + employees) in National Insurance contributions during my working life and in return, some eight years after I retired, I will be entitled to a meagre pension that will probably cover day to day food and things (or a reasonable bottle of wine a week) but is certainly not enough for me to live on, but thankfully, because I provided for my retirement, I don't need to. It is sort of indexed linked though, either RPI or CPI whichever is currently lower, isn't it?

Ok, I wasn't clear that you had other income beyond the state pension. Good!

CPI so that it drifts downwards from the true cost of living.

edit: I should add, I think this is interesting because if you are relying on your own savings you are going to have a hard time not seeing those deprecate whether you buy a house now or not.

Interest rates offered on savings are linked to RPI/CPI and the base rate. These are lower than inflation because "real" inflation is detached from RPI.

As you say if you buy a house they are also deprecating. And this is the signature of financial repression. You are not winning, you are simply losing more slowly.

Edited by bmf
Link to post
Share on other sites

Ok, I wasn't clear that you had other income beyond the state pension. Good!

CPI so that it drifts downwards from the true cost of living.

edit: I should add, I think this is interesting because if you are relying on your own savings you are going to have a hard time not seeing those deprecate whether you buy a house now or not.

Interest rates offered on savings are linked to RPI/CPI and the base rate. These are lower than inflation because "real" inflation is detached from RPI.

As you say if you buy a house they are also deprecating. And this is the signature of financial repression. You are not winning, you are simply losing more slowly.

Don't worry about me, I should have more than enough to see me out ;).

Link to post
Share on other sites

I have been retired for four years. During that time I've done exactly what I want and have not had to touch my capital so am not really repressed.

Excellent Bruce. Mods: can you move this to the Bruce subforum as it's about Bruce not wider economic issues! Thx!

Link to post
Share on other sites

Excellent Bruce. Mods: can you move this to the Bruce subforum as it's about Bruce not wider economic issues! Thx!

You ask questions and get answers, what else do you expect :rolleyes:.

Also, until I posted in this thread, it was the preserve of indebted house "owners" crowing about how well they're doing out of low interest rates at the expense of everyone else.

Link to post
Share on other sites

Quite frankly, food, petrol etc is such a small proportion of my annual spend that I couldn't give a damn.

The apartments I rent, in France and Spain, are getting cheaper each year, the rent on my UK house has been static for the last four years and the cash I have set aside for a house is appreciating each year.

Where in the UK are you planning to buy a house?

Link to post
Share on other sites

I haven't got a clue what it's supposed to cover. What I do know is that I paid about 25% of my salary (employers + employees) in National Insurance contributions during my working life and in return, some eight years after I retired, I will be entitled to a meagre pension that will probably cover day to day food and things (or a reasonable bottle of wine a week) but is certainly not enough for me to live on, but thankfully, because I provided for my retirement, I don't need to. It is sort of indexed linked though, either RPI or CPI whichever is currently lower, isn't it?

you make yourself sound so hard done by.

You know that your 25% contribution went toward the meagre pension for existing pensioners not toward your own 'entitlement'. in the near future it'll be the quarter of my salary covering that entitlement. Its ok, I'm told we're far richer now so i can easily afford it. Despite not being able to provide a home for my family in the way i would have been able to do a generation before.

Its not even as if your contributions were being given to a smaller generational cohort and now i don't face being taxed within a smaller proportion of workers to deliver the pension entitlements of what is known as the baby boom.

Thats a shit hand of cards however you look at.

Link to post
Share on other sites

you make yourself sound so hard done by.

You know that your 25% contribution went toward the meagre pension for existing pensioners not toward your own 'entitlement'. in the near future it'll be the quarter of my salary covering that entitlement. Its ok, I'm told we're far richer now so i can easily afford it. Despite not being able to provide a home for my family in the way i would have been able to do a generation before.

Its not even as if your contributions were being given to a smaller generational cohort and now i don't face being taxed within a smaller proportion of workers to deliver the pension entitlements of what is known as the baby boom.

Thats a shit hand of cards however you look at.

Actually, I don't really care, NI was always just another tax and I never relied on the state pension.

Link to post
Share on other sites

You ask questions and get answers, what else do you expect :rolleyes:.

Also, until I posted in this thread, it was the preserve of indebted house "owners" crowing about how well they're doing out of low interest rates at the expense of everyone else.

Bruce wins the Gold Medal bmf fails to win the Bronze. :)

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.

  • 434 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.