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Bank Of England Governor Vows To Prevent House Price Bubble

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http://www.theguardian.com/business/2013/aug/30/bank-of-england-house-price-bubble-mark-carney

Bank of England governor vows to prevent house price bubble

Mark Carney says he monitors market closely and could use 'toolkit' to restrict mortgage credit

Bank of England governor Mark Carney has said he is acutely aware of the risks of a housing bubble and is ready to step in with direct action to head off the threat.

Carney said he could use the new powers of the Bank's financial policy committee to curb surging house prices and uncontrolled mortgage lending.

In an interview with the Daily Mail, Canadian Carney said he was alert to the potential "damage" of a house price bubble: "I lived in the country (the UK) in the late 1980s and 90s, I saw the boom-bust cycle in the housing sector, the damage it can do, the length of time it took to repair.

"I'm very alert personally to this issue."

House prices have surged this month in the wake of government schemes to boost the market and help first-time buyers.

Property values rose 3.5% year on year, according to Nationwide Building Society, and climbed 1.4% in the three months to August, the fastest increase in three years.

Carney said the Bank was watching rising house prices closely, and "we will, as appropriate, make our views known in terms of the degree of this risk and the potential action that should be taken to address it".

He said the Bank now has a "toolkit" to restrict mortgage credit and could even raise the amount of cash banks and building societies must hold to restrain home loans.

"We have the responsibility to assess emerging vulnerabilities in the economy such as housing, make those assessments and recommend action," said Carney.

"Interest rates are principally an instrument of monetary policy for achieving the inflation outcome and there are other tools that address risks."

Hilarious stuff from our new commander in chief. He did well spotting the Canadian house price bubble and managed that one well?

As debt growth is key to UK GDP growth restricting mortgage credit is going to kill off the growth in GDP unless the govt ramps up deficit spending.

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He needs to open his eyes, notice the massive housing bubble that is suffocating the UK this very moment then take out a very large pin and pop it.

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More details on his plans are required otherwise all he will do is cause market uncertanty and force down prices. Perhaps that is his plan.

Anyway, for any of his toolkit to he effective it will need to be targeted, here is why:

London (like many other major cities) have kept good employment levels during the depression, whilst everywhere outside the major cities has suffered.

Keeping interest rates at 0% for the whole country is blowing bubbles in these cities (see London, Dublin, Las Vegas, Los Angeles, San Francisco, Miami etc.), they do not need these low interest rates but the rest of the country does.

Blanket Interest rates covering London, Wales, Scotland northern Ireland is very damaging as the problem that they were attempting to solve in the first place was not well spread geographically.

What would my proposition be?

1) Raise interest rates to a more sensible level say 2.5% NOW before more damage is caused.

2) Lend/Print local councils money at 0% interest for local development programs in poor areas of the country

3) Reduce council tax and income tax in those poorer areas using the 0% interest 100 year loans or Printing to pay for it.

Raising the interest rates will strengthen the pound and cause inward investment,reducing taxes in specific targeted areas will encourage migration into and development in those depressed areas of the country.

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He needs to open his eyes, notice the massive housing bubble that is suffocating the UK this very moment then take out a very large pin and pop it.

they dont measure house prices..they measure housing costs...the bit banks are interested in.

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There was an article somewhere to say he is renting whilst living here, so that must be saying something, no VI in prices rising, better to rent. ;)

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There was an article somewhere to say he is renting whilst living here, so that must be saying something, no VI in prices rising, better to rent. ;)

Watch what they do, not what they say.

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they dont measure house prices..they measure housing costs...the bit banks are interested in.

That's unfortunately what most people do as well.

The single most dangerous misconception amongst my house buying friends is that the mortgage that currently costs them 40% of their salary with a 0.5% base rate will only become more affordable over time with wage inflation.

The second most dangerous misconception is that you just 'walk away' from your arrears if the bank decides to repo.

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That's unfortunately what most people do as well.

The single most dangerous misconception amongst my house buying friends is that the mortgage that currently costs them 40% of their salary with a 0.5% base rate will only become more affordable over time with wage inflation.

The second most dangerous misconception is that you just 'walk away' from your arrears if the bank decides to repo.

I would like to think you were right.....going from what I know to have happened in the last housing crash early 90s when interest rates shot up, quite a few people that fell deeply into negative equity never repaid what they owed, they also lost their cash deposits.... ;)

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I would like to think you were right.....going from what I know to have happened in the last housing crash early 90s when interest rates shot up, quite a few people that fell deeply into negative equity never repaid what they owed, they also lost their cash deposits.... ;)

You cant pay what you havent got.

and yes, housing debt stays with you for 12 years, not the 6 years of ordinary debt.

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I would like to think you were right.....going from what I know to have happened in the last housing crash early 90s when interest rates shot up, quite a few people that fell deeply into negative equity never repaid what they owed, they also lost their cash deposits.... ;)

Going by the Irish housing crash the banks will NOT repossess and arrears will grow and grow and then....

MortgagedToUranus.jpg

The same will happen to the UK with interest rates pegged to declining productivity and negative growth caused by high fuel costs.

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You cant pay what you havent got.

and yes, housing debt stays with you for 12 years, not the 6 years of ordinary debt.

Bankrupty will clear it in a year, then you can go to a specalist lender who will let you start it all again.. Welcome to Alice in Wongaland.

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Going by the Irish housing crash the banks will NOT repossess and arrears will grow and grow and then....

MortgagedToUranus.jpg

The same will happen to the UK with interest rates pegged to declining productivity and negative growth caused by high fuel costs.

I've loving the not-to-scale planetary angle, it brings the chart to life. So essentially Ireland has 2Bn Euros of arrears, more than 6 months on average. And these banks are still pretending to trade?

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I've loving the not-to-scale planetary angle, it brings the chart to life. So essentially Ireland has 2Bn Euros of arrears, more than 6 months on average. And these banks are still pretending to trade?

Exactly, the sate propaganda is this:

1, Exit bailout agreement later this year

2, Announce the world is saved

All well and good, but they will need another backdoor bailout as the country is running a deficit and the banks are continuously losing money,

One big kick in the nuts with all this is there is almost no housing stock coming to market. Builders are bust and frightened to build, there are thousands and thousands of empty and unfinished houses lying around, not repossessed, not for sale.

It's grand scale manipulation - all around you can see the empty properties, you know that there are thousands not paying a single penny towards their mortgage for years and yet there is no stock for sale.

Went into AIB earlier this week and asked to close my account which has quite a lot in it. It took me 1/2 hour and a impromptu meeting with the manager to get them to close my 30 day notice account.

I told them I was more worried about the return of my money than the interest and that the amount was not covered by the guarantee scheme and in any case the government would not be able to cover it as they are bankrupt themselves.

Very interesting meeting, the staff must have thought I was some kind of nutter. But seriously the possibility of an Irish bail-in in the next 12 months is too high for the pissy 2% interest I get.

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Exactly, the sate propaganda is this:

1, Exit bailout agreement later this year

2, Announce the world is saved

All well and good, but they will need another backdoor bailout as the country is running a deficit and the banks are continuously losing money,

One big kick in the nuts with all this is there is almost no housing stock coming to market. Builders are bust and frightened to build, there are thousands and thousands of empty and unfinished houses lying around, not repossessed, not for sale.

It's grand scale manipulation - all around you can see the empty properties, you know that there are thousands not paying a single penny towards their mortgage for years and yet there is no stock for sale.

Went into AIB earlier this week and asked to close my account which has quite a lot in it. It took me 1/2 hour and a impromptu meeting with the manager to get them to close my 30 day notice account.

I told them I was more worried about the return of my money than the interest and that the amount was not covered by the guarantee scheme and in any case the government would not be able to cover it as they are bankrupt themselves.

Very interesting meeting, the staff must have thought I was some kind of nutter. But seriously the possibility of an Irish bail-in in the next 12 months is too high for the pissy 2% interest I get.

The CSO released April 2013 population stats yesterday.

Ireland's population increased by just 7,700 over the year, with net migration pretty much offsetting the natural pop increase.

IrelandPop.gif

http://www.cso.ie/en/releasesandpublications/er/pme/populationandmigrationestimatesapril2013/#.UiB2Mn__SCc

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I thought the 1st rule on 'how to get out of a hole' is to STOP DIGGING! :rolleyes:

Carney doesn't want to get the UK out of a hole, he wants to keep the plates spinning for a few years while he collects his £874k annual salary. Five years of that and he can head home to Canada with millions in the bank, job done.

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True, borrow as much as possible, interest rates are fixed for the next three years and probably 10 as the 7% unemployed figure will never be reached and inflation will always be set to drop to 2% in two years. Fill yer boots.

Interest rates aren't fixed by central bankers. The market determines the cost of money! Just ask the Reserve Bank of India.

Or rather, don't. They're a little bit preoccupied right now staving off a sovereign default. :D

The failure to address India's economic challenges is becoming an increasing source of tension at a time when rising domestic bond yields threaten to raise borrowing costs across the already slowing economy, while global prices of oil and gold - the country's two biggest imports - have surged this week. Foreign investors have sold almost $1 billion of Indian shares in the eight sessions through Tuesday - a worrisome prospect given stocks had been India's one sturdy source of capital inflows with net purchases so far this year still totalling nearly $12 billion.

India's main National Stock Exchange index fell as much as 3.2 per cent on Wednesday, although suspected buying by state-run insurer Life Insurance Corporation - often the buyer of last resort - led the index to recover by the close.

In bond markets, foreign investors have sold more heavily, with outflows reaching nearly $4.6 billion so far this year.

"If steps are not taken to implement the reforms necessary to tackle the structural issues, the government will be left with the so-called "3D options": debt default, devaluation, deflation," said Angelo Corbetta, head of Asia equity for Pioneer Investments in London.

"In India, devaluation is happening now and deflation could be about to start. The good news is that the debt default is highly unlikely."

BNP Paribas on Wednesday slashed its economic growth forecast for India for the fiscal year to March 2014 to 3.7 per cent from its previous 5.2 per cent - the weakest growth since 1991-92 when Indiabuckled under a balance of payments crisis that required a loan from the International Monetary Fund.

Read more: http://www.theage.com.au/business/markets/reserve-bank-of-india-steps-in-as-rupee-plunges-to-record-low-20130829-2sre5.html#ixzz2dUfM3ktu

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http://www.theguardian.com/business/2013/aug/30/bank-of-england-house-price-bubble-mark-carney

Hilarious stuff from our new commander in chief. He did well spotting the Canadian house price bubble and managed that one well?

As debt growth is key to UK GDP growth restricting mortgage credit is going to kill off the growth in GDP unless the govt ramps up deficit spending.

..this scheme is just an artificial 'feel good factor' for the current government leading into the election ...Carney if he has substance should stop this Government Guarantee scheme now...it is in fact a 'taxpayers foot the bill scheme' ...throw them all out now... :rolleyes:

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