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Bank Of England Identifies Need To Shelter Homeowners From Interest Spike

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Bank of England identifies need to shelter homeowners from interest spike

Ever get the feeling that your interests are not aligned with TPTB?

The Bank of England's base rate would peak close to 3% to protect mortgage payers from a big increase in monthly interest payments, a senior Bank of England official said .David Miles, a member of the central bank's interest rate setting committee, said base rates would remain lower than the long run average to keep mortgage rates affordable. Banks would need to maintain a healthy margin between the cost of money charged by the Bank and the rates they charge customers unlike their policy in the boom years when lending margins could be wafer thin, he said.

Cake and eat it.

Edited by ticket2ride

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Meaningless gabble.

Banks borrow money from the credit markets. BoE controls the overnight deposit.

Credit will flow to the market with the highest return.

Banks have to compete for credit, the price of which also includes risk - there's a lo of debt in the UK so there's a lot risk.

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This is the only meaningful bit of info:

Banks would need to maintain a healthy margin between the cost of money charged by the Bank and the rates they charge customers

So, how much is credit going o cost, say, Nationwide? 2% over the 10Y gilt?

What spread are NW going lend out at - 2% or 3%.

Lets say BoE 10Y yield returns to 4%, NW can borrow at 6%, NW lends at 8%.

It all adds up dont it?

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misuse of label 'homeowners' - surely they mean 'mortgage holders' as they are the only ones who would be 'victims' of excessive (normal) interest rates. :angry:

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This is forward guidance...its in plain English so its for the plebs...It says....we will look after borrowers so go right ahead and borrow.

As its in plain English, its not ACTUAL forward guidance, which will come in code in another set of outpourings.

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The Bank of England's base rate would peak close to 3% to protect mortgage payers from a big increase in monthly interest payments, a senior Bank of England official said .David Miles, a member of the central bank's interest rate setting committee, said base rates would remain lower than the long run average to keep mortgage rates affordable. Banks would need to maintain a healthy margin between the cost of money charged by the Bank and the rates they charge customers unlike their policy in the boom years when lending margins could be wafer thin, he said

He's so Nostradamus.

It's a prediction and the BoE and its employees have shown themselves to be utterly clueless when it comes to predictions. It's a be lucky prediction. He doesn't even give a timescale.

Edited by billybong

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misuse of label 'homeowners' - surely they mean 'mortgage holders' as they are the only ones who would be 'victims' of excessive (normal) interest rates. :angry:

Absolutely. In fact a genuine homeowner who is trying to live on savings (e.g. pensioners) would be the "victims" of interest rates below inflation.

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And what about the need to avert inflation.

Doubt it will happen, but are they actually so sick minded that low mortgage payments are more important than the cost of heating fuel and food?

I mean, It wouldnt surprise me, with the mentality of some homeowners. They'd sooner starve than risk repossession.

As that german comedian said, in britain, house owns you.

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And what about the need to avert inflation.

Doubt it will happen, but are they actually so sick minded that low mortgage payments are more important than the cost of heating fuel and food?

I mean, It wouldnt surprise me, with the mentality of some homeowners. They'd sooner starve than risk repossession.

As that german comedian said, in britain, house owns you.

The BoE is already responsible for five years of rising food and fuel prices via the reckless folly of QE. It's been part of the plan.

We'll only see consumer price inflation take off if we get significant wage inflation first. Of course, Osborne's doing his damnedest to encourage employers to spread the love.

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misuse of label 'homeowners' - surely they mean 'mortgage holders' as they are the only ones who would be 'victims' of excessive (normal) interest rates. :angry:

Absolutely - actual 'Home Owners' don't need any protection at all, they OWN their own house. If anything they are likely to have some savings and low rates penalise them.

The idea to 'protect' mortgage holders is as is always the case with financial policy, a cover for protecting the banks who stand to be in trouble should the mortgage go into default.

It should be pretty clear by now that TPTB are absolutely set on maintaining cheap credit and high levels of debt, no matter what the cost to everyone else. Their economic policy is 'growth' through debt creation - requiring low interest rates - and the banks are in such a precarious position regarding their over-leverage that again, interest rates must be kept low to stop default.

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The BoE is already responsible for five years of rising food and fuel prices via the reckless folly of QE. It's been part of the plan.

We'll only see consumer price inflation take off if we get significant wage inflation first. Of course, Osborne's doing his damnedest to encourage employers to spread the love.

Indeed. Its easy for Farage to gloat at the mass unemployment of southern europe, but the side effect of avoiding mass unemployment here is the devaluation of everyones wages who has a job... Spain has done better than the UK FFS. Kind of ironic that its Farage pushing Keynesian devaluation and the 'socialist' EU being far more fiscally conservative.

Wages.png

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Bank Of England Identifies Need To Shelter Homeowners From Interest Spike

Even the people in the link below?

http://

www.standard.co.uk/lifestyle/london-life/londons-underground-resistance-in-chelsea-9157267.html

Multi-million pound terraced houses that used to be artisans' houses. What next.

Edited by billybong

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The BoE is already responsible for five years of rising food and fuel prices via the reckless folly of QE. It's been part of the plan.

We'll only see consumer price inflation take off if we get significant wage inflation first. Of course, Osborne's doing his damnedest to encourage employers to spread the love.

Oil is still $40 below 2008 peak.

So are most other commods, despite the expansion of CB b/sheets.

A good chunk of domestic UK inflation has been down to Osborne ramping administered prices.

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Oil is still $40 below 2008 peak.

So are most other commods, despite the expansion of CB b/sheets.

A good chunk of domestic UK inflation has been down to Osborne ramping administered prices.

I don't think you can look at oil from a trading perspective when it comes to consumer prices RK. What counts is the average price over a period of time rather than some arbitrary price point.

The 2008 oil peak was a temporary spike and the average price of European Brent crude that year was $97/bbl. In 2013 the average was over $108.

In sterling terms it's even more marked: the 2008 average was about £50/bbl and in 2013 it was nearly £70.

BrentPrice.gif

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Oil is still $40 below 2008 peak.

So are most other commods, despite the expansion of CB b/sheets.

A good chunk of domestic UK inflation has been down to Osborne ramping administered prices.

2008 is an outlier. Goldmans in particular (but not exclusively) needed to run off the huge profits they were making on their elephant trades with AIG without crashing house prices prematurely or alerting the SEC to the scale of mortgage fraud in the market. They did it by speculating on commodities, their $200bbl crude oil call notoriously. 2008's commodity spike is where the housing Ponzi ultimately got washed out. Where else could all that excess cash have come from? It certainly wasn't demand driven.

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Any mention of shelter for savers ( who have worked for, earned and been taxed on their money ) with interest rates at all time lows ?

It seems to me these people are hardly independent are they ?

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I don't think you can look at oil from a trading perspective when it comes to consumer prices RK. What counts is the average price over a period of time rather than some arbitrary price point.

The 2008 oil peak was a temporary spike and the average price of European Brent crude that year was $97/bbl. In 2013 the average was over $108.

In sterling terms it's even more marked: the 2008 average was about £50/bbl and in 2013 it was nearly £70.

BrentPrice.gif

Sure. If the 08 spike was temporary then of course the '08 collapse was also temporary.

Taking your average price figures that's c. 11% over 5 years. Which is more or less target inflation.

On that basis it's difficult to argue the massive expansion in CB b/sheets has caused anything other than target inflation, at least in the oil price itself. It has been significantly lower for instance than in the 5 years prior to '08 when there was no QE. So QE doesn't seem to be the issue.

Sterling as you know is different due to the (mostly) initial devaluation, which in any event has been trending the other since last summer. If anything, the issue there will be how to talk sterling down again.

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Oil is still $40 below 2008 peak.

That was a SPIKE...the trend is what you should be paying attention to. Stop the disinformation.

+ The fall in U.K domestic energy production is a big problem.

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Bank of England identifies need to shelter homeowners from interest spike

Ever get the feeling that your interests are not aligned with TPTB?

Cake and eat it.

.....trying to protect the Banks with good money after bad ...not the OOs ...in the medium term it will not work because it is the "ostrich head in sand" method....poor them for being weak ..and poor us having them as a central bank... :rolleyes:

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