Uk Interest Rates To Rise This Year And Could Peak At 5Pc

[okaycuckoo]

And what if there is no 'natural' rate? What if the economy isn't static, stable and equilibrium-seeking but dynamic, unstable and equilibrium-disturbing? You might in your ignorance keep base rates too low for long periods while chasing this chimera and allow vast, elaborate debt bubbles to flourish. Alternatively, you might tighten too quickly in the aftermath of a slump, or raise rates too far, and drive the economy straight back into recession.

It's just a theory. But our politicians take theory so seriously that we vote for it.

[bearwithasorehead]

It's not just people of tracker rates that would find themselves underwater. Actually even a small rise to 1.5% would screw those who took out a fix in the last couple of years. When they revert to SVR on base + 3.5% they are dead in the water. Look at how banks have even changed the wording on SVR to get rid of references to base +. Halifax SVR is already 4%

[bearwithasorehead]

Looking at the popular Barclay's mortgage site (Woolwich) who are notorious for lax lending even now and look how they've changed wording:

* BBBR = Barclays Bank Base Rate which is currently 0.50% (effective 6 March 2009)

If you get a fix you'll be on 4% in two years IF the base rate stays at 0.5%

So many on these boards are on high incomes they sometimes forget how many live from paycheck to paycheck. In my very average West Midlands town, I have an acquaintance on a good wage in a 300k house with a LTV of over 90% who would be wiped out by a rise to 1.5%. At present he can't afford to put petrol in his car.

[Bruce Banner]

Looking at the popular Barclay's mortgage site (Woolwich) who are notorious for lax lending even now and look how they've changed wording:

* BBBR = Barclays Bank Base Rate which is currently 0.50% (effective 6 March 2009)

If you get a fix you'll be on 4% in two years IF the base rate stays at 0.5%

So many on these boards are on high incomes they sometimes forget how many live from paycheck to paycheck. In my very average West Midlands town, I have an acquaintance on a good wage in a 300k house with a LTV of over 90% who would be wiped out by a rise to 1.5%. At present he can't afford to put petrol in his car.

More fool him, buying a house he can't afford. I hope he doesn't expect a bail out, or forbearance, when the time comes.

[dances with sheeple]

Looking at the popular Barclay's mortgage site (Woolwich) who are notorious for lax lending even now and look how they've changed wording:

* BBBR = [/size]Barclays Bank Base Rate which is currently 0.50% (effective 6 March 2009)[/size]

If you get a fix you'll be on 4% in two years IF the base rate stays at 0.5%

So many on these boards are on high incomes they sometimes forget how many live from paycheck to paycheck. In my very average West Midlands town, I have an acquaintance on a good wage in a 300k house with a LTV of over 90% who would be wiped out by a rise to 1.5%. At present he can't afford to put petrol in his car.

Hopefully there are many like your friend who will have to bail out back to cheap rented pretty quickly, forcing supply quickly on to the market when the time comes.

[billybong]

At present he can't afford to put petrol in his car.

and likely he's not the only one but that's not savers and taxpayers fault.

[dances with sheeple]

and likely he's not the only one but that's not savers and taxpayers fault.

Exactly, it is his fault, and the idiot banks fault, not to mention the government.

[Bruce Banner]

and likely he's not the only one but that's not savers and taxpayers fault.

Savers go without now so they will have money later in life. Thieves take this money and give it to those who were not so prudent. Fools spend all their money as they earn it and end up with nothing, although having the thieves on their side, perhaps they're not so foolish after all.

[Sour Mash]

It's pretty clear that we are in the early stages of a bubble (not just housing, the entire economy is booming on ultra-lax monetary policy) and with an election coming up, absolutely nothing is going to be done to hurt that bubble.

Raising rates would cut away the foundations of said bubble so irrespective of how out-of-control things might get, nothing of that sort is going to happen this side of the general election nor indeed the other if they can help it.

So, we get lots of 'talk' from the Central Bank about raising rates but will get absolutely no action any time soon.

For the umpteenth time: Central Bankers: What they DO, not what they SAY.

[okaycuckoo]

For a central banker saying is doing.

[Bruce Banner]

It's pretty clear that we are in the early stages of a bubble (not just housing, the entire economy is booming on ultra-lax monetary policy) and with an election coming up, absolutely nothing is going to be done to hurt that bubble.

Raising rates would cut away the foundations of said bubble so irrespective of how out-of-control things might get, nothing of that sort is going to happen this side of the general election nor indeed the other if they can help it.

So, we get lots of 'talk' from the Central Bank about raising rates but will get absolutely no action any time soon.

For the umpteenth time: Central Bankers: What they DO, not what they SAY.

Therein lies the problem with our political system. A government is elected for five years, but the memory span of the average voter is five weeks.

[shindigger]

Savers go without now so they will have money later in life. Thieves take this money and give it to those who were not so prudent. Fools spend all their money as they earn it and end up with nothing, although having the thieves on their side, perhaps they're not so foolish after all.

Amen.

[gf3]

I think the dangers of turning Japaneses is real. I don't think raising base rates until we see 10% wage increases from here is a good idea.

[Bruce Banner]

I think the dangers of turning Japaneses is real. I don't think raising base rates until we see 10% wage increases from here is a good idea.

More theft.

In Japan, house prices fell by 80% and stayed there for twenty years, what's wrong with that? They had a housing bubble, it corrected.

[Killer Bunny]

My goodness. HPCers are getting it.

#turningjapanese

#bringbackcapitalism #banHTB #banQE #banbankbailouts

[shindigger]

My goodness. HPCers are getting it.

#turningjapanese

#bringbackcapitalism #banHTB #banQE #banbankbailouts

[Renewed Investor]

Can our Interest rates really rise given what the ECB are now doing?

I mean is this not just a vague speech to satisfy those concerned about HPI to tide us over until the election?

[zugzwang]

More theft.

In Japan, house prices fell by 80% and stayed there for twenty years, what's wrong with that? They had a housing bubble, it corrected.

You're right about house prices, but it was much more than a housing bubble and the Japanese have spent 25 yrs borrowing and printing to hold up their zombie economy against a proper correction.

Edited June 14, 2014 by zugzwang

[winkie]

They'll use "forward guidance" for as long as possible without actually doing anything until the markets grow impatient. Could be a few years yet!

He said all depends on the data.....can make that to be what you want it to be, or change it as and when convienient.... http://en.wikipedia.org/wiki/Lies,_damned_lies,_and_statistics

[RentaBear]

We had a MIP from Yorkshire Building Society. At the time, I thought it was odd that the offer was only valid for 30 days, but if we had proceeded, we'd have 6 months to complete...

At the time, they were offering 3.29% on an offset fixed rate for 75% LTV - I just searched again, it's now 3.49%. The BoE doesn't need to actually raise its rates for mortgage rates to rise...

[winkie]

We had a MIP from Yorkshire Building Society. At the time, I thought it was odd that the offer was only valid for 30 days, but if we had proceeded, we'd have 6 months to complete...

At the time, they were offering 3.29% on an offset fixed rate for 75% LTV - I just searched again, it's now 3.49%. The BoE doesn't need to actually raise its rates for mortgage rates to rise...

Not that different to the energy companies then.

[Democorruptcy]

It's pretty clear that we are in the early stages of a bubble (not just housing, the entire economy is booming on ultra-lax monetary policy) and with an election coming up, absolutely nothing is going to be done to hurt that bubble.

Raising rates would cut away the foundations of said bubble so irrespective of how out-of-control things might get, nothing of that sort is going to happen this side of the general election nor indeed the other if they can help it.

So, we get lots of 'talk' from the Central Bank about raising rates but will get absolutely no action any time soon.

For the umpteenth time: Central Bankers: What they DO, not what they SAY.

Anyone who knew what Carney was going to say could have made a fortune. Whether what he said is true or not.

Sterling up v lots of currencies, builder shares down etc. etc.

[FreeTrader]

Anyone who knew what Carney was going to say could have made a fortune. Whether what he said is true or not.

Sterling up v lots of currencies, builder shares down etc. etc.

I had a live chart running on GBP/USD and the spike came pretty much smack on 9.00pm when the BoE released the text of Carney's speech. I downloaded it, scanned through it, noticed the quote about interest rates possibly rising faster than the market expects, and immediately posted that very quote on the board here at 9.02. I don't think anyone not in the loop could have reacted any faster.

If you noticed though, several sources very quickly posted articles on the speech, so it was clear that a number of journalists had access to the speech before 9.00 in order to prepare their response for publication. Whether they were in a confined environment (as the Fed does when it gives journos market sensitive information) is unknown, but if they weren't then it's a disgrace - all sorts of insiders would have had access to the info and could trade on it as soon as the speech was released into the public domain.

Stuff like this doesn't particularly bother me because I don't actually do any short-term trading, but I do think it's wrong that the big guys can make millions like this in just a few seconds - all facilitated by the Bank of England.

[winkie]

You do have to sometimes wonder if the big money and a large chunk of our economy is made from short-term trading/gambling on information available to few...not that different to putting a few bob on the 2.45 at newbury....

[Democorruptcy]

I had a live chart running on GBP/USD and the spike came pretty much smack on 9.00pm when the BoE released the text of Carney's speech. I downloaded it, scanned through it, noticed the quote about interest rates possibly rising faster than the market expects, and immediately posted that very quote on the board here at 9.02. I don't think anyone not in the loop could have reacted any faster.

If you noticed though, several sources very quickly posted articles on the speech, so it was clear that a number of journalists had access to the speech before 9.00 in order to prepare their response for publication. Whether they were in a confined environment (as the Fed does when it gives journos market sensitive information) is unknown, but if they weren't then it's a disgrace - all sorts of insiders would have had access to the info and could trade on it as soon as the speech was released into the public domain.

Stuff like this doesn't particularly bother me because I don't actually do any short-term trading, but I do think it's wrong that the big guys can make millions like this in just a few seconds - all facilitated by the Bank of England.

The thing that crossed my mind was RBS. A governbankment investment bank that could have made lots of money if they had any inclination what was going to be said. Carney recapitalising the bank? OK if you work there and are on a whopping bonus for your "insightful" trades.