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Mr Tickle

So Where Are Rates Going ?

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Hello Peeps, been a while, but time for a post and to gather some of your wise thoughts!

I've been trying to buy recently, however there is still a 15% gap between what I am prepared to pay and seller expectations, so i've been unsuccessful so far.

Interestingly, my local EA assured me that prices are due to rise again in the new year, as a rate cut he seemed to think was inevitable ...I enquired as to his reasoning on this, and was told that it was because the 'experts' (think he actually meany VI's) had predicted it.

But where are rates going? I love a rate rise or 2, it would just push things over the edge imo ......... but is it likely ....... I realy want to buy a house and get on with my life before my young family decide its time to leave home! ..... I think i'm going crazy :lol:

Mr T..

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Article in the Sunday Times yesterday said rates could go down to 3.75% by the end of 2006.

Not much good for the investments but good for the nephews and neices paying off their mortgages.

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Hello Peeps, been a while, but time for a post and to gather some of your wise thoughts!

I've been trying to buy recently, however there is still a 15% gap between what I am prepared to pay and seller expectations, so i've been unsuccessful so far.

Interestingly, my local EA assured me that prices are due to rise again in the new year, as a rate cut he seemed to think was inevitable ...I enquired as to his reasoning on this, and was told that it was because the 'experts' (think he actually meany VI's) had predicted it.

But where are rates going? I love a rate rise or 2, it would just push things over the edge imo ......... but is it likely ....... I realy want to buy a house and get on with my life before my young family decide its time to leave home! ..... I think i'm going crazy :lol:

Mr T..

I think we will see cuts in interest rates next year, will not help the economy much or keep house prices from falling though IMO.

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I think we will see cuts in interest rates next year, will not help the economy much or keep house prices from falling though IMO.

I beg to differ. If interest rates go up this would affect house prices. When interest rates dropped in August the house prices increased. Interest rates have the greatest impact on house prices as they affect people's mortgages. The problem with 1988 was that interest rates were at 15%.

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Why do people take such a short term view of interest rates? What is the point of looking at rates over the next 6 months when you are taking on a 25 year commitment?

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I beg to differ. If interest rates go up this would affect house prices. When interest rates dropped in August the house prices increased. Interest rates have the greatest impact on house prices as they affect people's mortgages. The problem with 1988 was that interest rates were at 15%.

I think that was 1992 - 4 years after the crash started

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Nobody actually knows where interest rates will go from here. Even the MPC do not know what their future rate decisions will be, if they did there would be little point in them meeting to discuss it for a whole day and a half each month. We can only speculate.

However, if the currency markets thought that there were about to be an interest rate cut then the pound would fall against the dollar. As it happens the pound has held up at around 1.77USD for a few weeks now. At the slightest hint of a rate cut this would be on the way back down towards 1.70USD.

My speculation - no change for several months until the MPC can see what effect 12% increased factory input prices and January pay rises have had.

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I beg to differ. If interest rates go up this would affect house prices. When interest rates dropped in August the house prices increased. Interest rates have the greatest impact on house prices as they affect people's mortgages. The problem with 1988 was that interest rates were at 15%.

I used to believe IR's would rise early next year. Im begining to doubt that now. Looks like ol' economic sensation was right about that one. Interestingly, regarding gearing, the average mortgage was around 7% (i think) before the rate hikes at the last crash. People who stretched themselves to get a mortgage at 4% last year would be in exactly the same situation if IR's jumped to 8% as thos in the 90's who suffered 15%.

Ah well, more time for me old dear to try clear her interest only mortgage. :o:unsure: :angry:

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Guest Charlie The Tramp

The problem with 1988 was that interest rates were at 15%.

IMHO an increase of just .75% in rates woud have the same impact as 15% in the late eighties. It`s that debt thingy keeps raising it`s ugly head, the reason the MPC is gently walking on those eggshells.

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I think that was 1992 - 4 years after the crash started

Absolute tosh.

6th October 1989 - 8th October 1990 = 14.875%

Between 13th Feb 1991 - Nov 1992 - rates fell to 6.875%

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Guesswork:

I think the Bank of England will probably keep rates as they are for a while.

I think the Federal Reserve will continue to raise the base rate over in the States and this will weaken the pound, against the dollar anyway.

This may drive inflation… which in turn may drive a rate rise.

But this will take time to realise, while I’m sticking my neck out I’ll speculate possibly late 2006 or early 2007

Or anything could happen, or not happen

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Absolute tosh.

6th October 1989 - 8th October 1990 = 14.875%

Between 13th Feb 1991 - Nov 1992 - rates fell to 6.875%

Thank you sir. I thought I was about right but did not like to argue. As a relative newcomer, it seems churlish to be antagonistic.

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Why do people take such a short term view of interest rates? What is the point of looking at rates over the next 6 months when you are taking on a 25 year commitment?

Because if all the predictions from people of a housing crash continue at the current pace, it aint never going to happen and till i'm so flaming old the only home i'll need is one with nurses in it.

I have a yung family and want them to grow up in a decent family home ...... before they turn 18!

Lets face it, I was on this site this time last year, reading all the doom and gloom ... and it hasn't happened.

Yes the odd house has been drastically reduced ... but its hardly widespread.

The only thing that gives me a glimmer of hope is that the £ has rallied against the $.

And no disresect to anyone, but the only thing that bring houses down is a lack of affordability, however that may occur, be it interest rates, tax, debt repatments, or a credit crunch ........ but as yet nothings had much of an effect.

Maybe i've been saying it for so long i've lost faith in what deep down I knoe what SHOULD happen .... but so far its just not.

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Thank you sir. I thought I was about right but did not like to argue. As a relative newcomer, it seems churlish to be antagonistic.

I've been on this site for nearly a year now. I upset a load of unquestionning fools with my first post and I fully intend to continue.

Unfortunately there's many people on here who'll accept everything that's posted so long as it comes from a recognised bear.

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Guest Charlie The Tramp

Interest Rates during the period of the last HP correction

1989 25 May 13.7500

31 Aug 13.8438

4 Sep 13.8750

8 Sep 13.7500

6 Oct 14.8750

1990 8 Oct 13.8750

1991 13 Feb 13.3750

27 Feb 12.8750

22 Mar 12.3750

12 Apr 11.8750

24 May 11.3750

12 Jul 10.8750

4 Sep 10.3750

1992 5 May 9.8750

22 Sep 8.8750

16 Oct 7.8750

13 Nov 6.8750

1993 26 Jan 5.8750

23 Nov 5.3750

1994 8 Feb 5.1250

12 Sep 5.6250

7 Dec 6.1250

1995 2 Feb 6.6250

13 Dec 6.3750

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Guesswork:

I think the Bank of England will probably keep rates as they are for a while.

I think the Federal Reserve will continue to raise the base rate over in the States and this will weaken the pound, against the dollar anyway.

This may drive inflation… which in turn may drive a rate rise.

But this will take time to realise, while I’m sticking my neck out I’ll speculate possibly late 2006 or early 2007

Or anything could happen, or not happen

Spot On....

Hold until Mar 06

Then 5.25% by Dec 2006

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I've been on this site for nearly a year now. I upset a load of unquestionning fools with my first post and I fully intend to continue.

Unfortunately there's many people on here who'll accept everything that's posted so long as it comes from a recognised bear.

You cannot have upset them that much. Also, there must be some recognised bulls who comment as well?

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You cannot have upset them that much. Also, there must be some recognised bulls who comment as well?

A few have me on ignore apparently. Most bulls on here are wind ups or fantasists. There's a few who are worth reading (TTRTR) just to keep an alternative perspective on things.

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I guess my frustration comes from the fact that yet another year has passed and rates dont appear to be going anywhere fast, the VI indexes are all showing positive growth, etc etc.

I was really convinced that the back end of 2006 was going to produce some fireworks .........

Good to see Charlie still around with all those facts and figs ....... still on the sherry charlie :)

Edit I meant 2005 ..maybe 2006 will .. :lol:

Edited by Mr Tickle

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A few have me on ignore apparently. Most bulls on here are wind ups or fantasists. There's a few who are worth reading (TTRTR) just to keep an alternative perspective on things.

Thank you for that. I will have to keep my views to myself as I have quite a few family members in the property business but if I shared their thoughts I would probably make myself unpopular.

As I said, I did read an article yesterday about interest rates dropping to 3.75% by the end of 2006.

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As for 'IgnoranusSteve' - not so sure he actually succeeded in upsetting anyone - just terminally bored a lot of people, threw a petulant 'Im leaving unless you love me' poll, lost the poll yet didnt leave as promised, and now continues with his excrutiatingly uninteresting yawn-spasming posts...

interest rates:- dollar beginning the upward creep again, now that all the suckers are back in on one side and the weak holders are shaken out on the other. Another quarter point is parity. If interest rates were the same, and U were Johnny foreigner, what would you rather hold? Good old Blighty pounds, or greenbacks???

And what do you think that will do to UK rates? Exert upward pressure on them? Of course not. That would upset a lot of Oz BTL parasites, and would be political suicide (unlike Sipps). :-)

Edited by CrashIsUnderWay

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As I said, I did read an article yesterday about interest rates dropping to 3.75% by the end of 2006.

Angus,

Read this from 4 week ago

The Sunday Times

Since it was written Euro rate has increased to 2.25% and Fed to 4.25% with the Fed almost certainly going on up to 4.75%

Do you still believe UK rates could drop to 3.75% after reading this article??

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