Is Ir Hike On It's Way

[Venger]

To be fair I was ahead of the game on deflation and was one of the few posters to have a deflationary signature long before the oil shock turned the stats negative and this forum was still calling hyper inflation. I have merely moved onto the fence because I am not confident either way.

Yes, but you're also one of the posters who keeps asking 'What property boom' - 'Prices gone nowhere in 10 years'

Against this outside Nottingham. £370,000 bungalows, as I see all the time on RM searches in North West = "What boom?" ("ho-ho-ho.. is the ripple coming soon?"

Needs hard HPC.

I note a small bungalow has just gone under offer a couple of doors down from where I live, the asking was 370k and it has been on for about a year. I do think this suggests the ripple is finally reaching the North Midlands. I didn't expect it to sell, but actually there isn't that much left for sale at the moment in my village near Nottingham.

[Venger]

To be fair I was ahead of the game on deflation and was one of the few posters to have a deflationary signature long before the oil shock turned the stats negative and this forum was still calling hyper inflation. I have merely moved onto the fence because I am not confident either way.

Although I'm glad you've changed your Avatar. Even though it wasn't her (I checked on an image scan) your last one looked too much like Lindsay Lohan

[Killer Bunny]

Base rates, perhaps not.

I wouldn't be so sure about mortgage rates, particularly for landlords.

Yeah maybe. Tho' seems more reasonable lenders will instead widen buffer to 150/167% as has been mooted.

[Maynardgravy]

Throwing nuclear weapons at it to create inflation. Result 0% CPI.

Deflationary forces obviously stronger than inflationary ones.

Christ, don't give them ideas.

[winkie]

With stable prices, low inflation, low interest rates are fine, debt will not be erroded.....if higher inflation becomes the norm, rising wages could cause that, then interest rates will have to rise or else money will rapidly lose value......

.....rising house prices using cheap high debt leverage works against that grain......whilst still able to make the monthly repayments.

..... the biggest fear is growing unemployment......high debt, no savings, rising inflation and no job or underemployed all chips will then be against you.

[BorrowToLeech]

Yeah maybe. Tho' seems more reasonable lenders will instead widen buffer to 150/167% as has been mooted.

That covers the tax rises, but I was thinking more about Basel III. Basel III will increase funding costs in general, equivalent to a (small) rate rise, but it increases some funding costs more than others. It seems like landlords might be in the firing line, but I haven't looked into the details.

Of course, central banks might lower base rates to compensate...

[pipllman]

Yes, the link between base rate and the rate at which money can be borrowed will always be there

But lenders may indeed widen the gap in the face of 'increasing risk' (read another way to make more money)

Right now on the Barclaycard website, the standard APR for one of its cards is 18.9% APR (37.8 x the base rate...), base + 18.4%

Barclays (through Woolwich maybe) offers BTL mortgages at 75% LTV at 4.9% APR, base + 4.4%

Is lending £2k on a credit card really 3.86 x more risky to the bank than lending £75k on a £100k BTL?

[Si1]

Throwing nuclear weapons at it to create inflation. Result 0% CPI.

Deflationary forces obviously stronger than inflationary ones.

Time stamped

Sir Roger of Bootle said rate rise around q2 2016. I'm out of my depth arguing the details with you, rk or rb. But I'm finding it interesting.

[thecrashingisles]

I think the 'turning Japanese' meme is wrong. It's telling that Hillary Clinton has started using 'America needs a pay rise' as a campaign slogan. Inflationary pressure will build.

[Timak]

I think the 'turning Japanese' meme is wrong. It's telling that Hillary Clinton has started using 'America needs a pay rise' as a campaign slogan. Inflationary pressure will build.

I think the classic explanation of inflation "too much money chasing too few goods" is now incorrect with global trade.

However we can still force service price inflation through things like the minimum wage increase.

As a note on that the governments 30 hour promise for free childcare is based upon a price per child per hour that already leads to most childcare providers running at break even at best. Now they've doubled the amount of free hours and put up the minimum wage to a level well above that which most childcare companies pay. My eldest child's playgroup currently runs at a £3k loss per annum, they'd need the government to up the rates per child per hour by 50% to run at break even.

So we'll either have massive inflation in the costs of childcare or no childcare available.

[zugzwang]

Consumer inflation falls back to zero.

http://www.telegraph.co.uk/finance/economics/11737998/UK-inflation-falls-back-to-zero-in-June.html

[South Lorne]

Consumer inflation falls back to zero.

http://www.telegraph.co.uk/finance/economics/11737998/UK-inflation-falls-back-to-zero-in-June.html

..a small point from deflation....

[50sQuiff]

It's on. Carney and co just did everything but say a hike is coming in August.

A knee to the groin of an already punch-drunk BTLer.

[sPinwheel]

August 2016?

[TheCountOfNowhere]

It's on. Carney and co just did everything but say a hike is coming in August.

A knee to the groin of an already punch-drunk BTLer.

I'll believe it when I see it/ They've been saying they will raise rates for years....they've lied.

[Arbitrage]

There will be no interest rate rises, because UK households would default on their mega debts again, causing another banking crisis

Forget inflation and the value of the £

The main factor that the Bank looks at when setting interest rates is private debt as a percentage of household income. This ratio is unlikely to fall in the near future. Therefore, interest rates will remain at their current 'emergency/crisis' level

[Guest_northshore_*]

It's on. Carney and co just did everything but say a hike is coming in August.

A knee to the groin of an already punch-drunk BTLer.

I didn't hear him imply that.

[Killer Bunny]

I think the 'turning Japanese' meme is wrong. It's telling that Hillary Clinton has started using 'America needs a pay rise' as a campaign slogan. Inflationary pressure will build.

Turning Japanese says what IS happening.

What you say is what MIGHT happen.

I find it best to stick to what we know rather than subjective conjecture.

[50sQuiff]

Everyone's bought into the #turningjapanese nonsense I see.

Miles: "A rise in rates is clearly coming and isn't a bad thing"

Carney: "Wage data is firmer than we had expected"

McCaffery: "Raising rates will cause a reallocation of capital to more productive sectors"

Carney: "Interest rate normalisation will help productivity."

Carney: "This will be the first time young people have seen rates go up"

I think that's about as explicit as central bankers get.

Edited July 14, 2015 by 50sQuiff

[“Nasty Piece of work”]

Just speculation will get the ball rolling, and the bowels in motion. It is not the actual, but the fear.

[Killer Bunny]

Everyone's bought into the #turningjapanese nonsense I see.

Miles: "A rise in rates is clearly coming and isn't a bad thing"

Carney: "Wage data is firmer than we had expected"

McCaffery: "Raising rates will cause a reallocation of capital to more productive sectors"

Carney: "Interest rate normalisation will help productivity."

Carney: "This will be the first time young people have seen rates go up"

I think that's about as explicit as central bankers get.

Do tell what is different to what they've been saying for 3 years?

Nonsense?

Inflation is nonsense. There isn't any. And there won't be any. Look around you.

[crashmonitor]

There will be no interest rate rises, because UK households would default on their mega debts again, causing another banking crisis

Forget inflation and the value of the £

The main factor that the Bank looks at when setting interest rates is private debt as a percentage of household income. This ratio is unlikely to fall in the near future. Therefore, interest rates will remain at their current 'emergency/crisis' level

I think they could handle a bit, we have had eight years of deleveraging now with debt stuck at 1.4 trillion against a 25% rise in inflation ( indeed the biggest household debt deleveraging in modern history). Moreover the troublesome debts are now 7-10 years into their term, if they survived 2008 when rates were twice todays they will probably survive hikes in 2016.

The public sector has taken up the debt baton to compensate, that's what concerns me more. Probably classic Keynes but now the public sector can't stop even as GDP hits 3% our welfare has become too precious to forego.

Edited July 14, 2015 by crashmonitor

[50sQuiff]

There's more to the mandate than inflation targeting, KB.

Yes, they've heavily trailed a rate rise once before (as I see it) and chickened out. But to do it again after making such explicit statements would be too damaging for credibility surely?

Anyway, based on today's BoE comments I'd say a BTL one-two punch is on the cards.

Edited July 14, 2015 by 50sQuiff

[Guest_northshore_*]

Everyone's bought into the #turningjapanese nonsense I see.

Miles: "A rise in rates is clearly coming and isn't a bad thing"

Carney: "Wage data is firmer than we had expected"

McCaffery: "Raising rates will cause a reallocation of capital to more productive sectors"

Carney: "Interest rate normalisation will help productivity."

Carney: "This will be the first time young people have seen rates go up"

I think that's about as explicit as central bankers get.

That needs to be interpreted in context. Repetition as KB says, but also what that means and what Carney admitted to - expectations management and 0% CPI.

[Killer Bunny]

If it happens then fine. Though, if it happens, I'd expect it to be very short lived.

But to forecast based on comments by politicians and the ilk is plain silly.