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gruffydd

Almost No One In The City Expects Interest Rates To Rise

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"Almost no one in the City expects them to rise. Just six months ago, many were anticipating rates peaking at 5.5%. Today, the market, is pencilling in a fall of 0.25% over 3-6months. The turnaround, sparked by confidence that the recent escalation in US interest rates is now over, has fundamentally underpinned the market"

Excerpt from Patrick Collinson article entitled "Why the big beasts feel bullish - With shares on the up again, Patrick Collinson looks at the prospects for investors" p.collinson@guardian.co.uk

Is he correct in making this assertion? What are interest rate futures suggesting at the moment?

BTW, I've noticed Mr Bootle spinning furiously on interest rates - suggesting cuts down to 4% - reasons - falling wage inflation, etc.

Cheers,

Gruff

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I have read a lot of stuff in the last week or so which seems to suggest that the fed may not be as near to the end of the tightening cycle as some hope.

If US rates continue to rise . . . . . . . . . . . . . to say 5%, then what?

Interesting times.

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"Almost no one in the City expects them to rise. Just six months ago, many were anticipating rates peaking at 5.5%. Today, the market, is pencilling in a fall of 0.25% over 3-6months. The turnaround, sparked by confidence that the recent escalation in US interest rates is now over, has fundamentally underpinned the market"

I've obviously been on the forum too long, cuz when I read this article today I felt compelled to write to the author with a stream of invective.

"Looks like I picked the wrong week to quit smoking"

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Stagnation is not good for us older STRs.

If I wasn't so senile that I couldn't find the panic button I'd be pressing it vigourously right now.

Plum.

Edited by Fancypants

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Low interest rates = Stagnation

Interest rates are going to be increasingly irrelevant now that sentiment is turning away from property. If the people who would previously have put money into BTL start putting it into the stock market, then the housing market is dead, dead, dead.

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Interest rates are going to be increasingly irrelevant now that sentiment is turning away from property. If the people who would previously have put money into BTL start putting it into the stock market, then the housing market is dead, dead, dead.

I agree that the SMARTER investors will move out of property. Unfortunately the EA's will use low IR's as a tool for justiftying high prices. And without doubt a drop in interest rates will spark a mini-revival. Unfortunately, people live for today and dont think about tommorrow.

I want them to go up - I dont want EA's having anything to justify their PATHETIC prices. SIPPS has been and gone and they are on the back foot - An IR drop will be their only saving grace.

PLEASE PLEASE PLEASE - Up interest rates and let my savings grow. Also forcing prices down.

Edited by teddyboy

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Unfortunately the EA's will use low IR's as a tool for justiftying high prices.

None of which matters if people aren't buying.

The bubble has been created by 'investors' borrowing vast amounts of money because they expected a 20% annual return from house price inflation, and by FTBs desperate to 'get on the ladder' before 20% annual inflation made it impossible for them to ever buy even a crappy one-bed flat. If the 'investors' move to the stock market and prices are even static, then no-one is going to be buying at the bottom of the chain, which means no-one is going to be buying anything.

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None of which matters if people aren't buying.

then no-one is going to be buying at the bottom of the chain, which means no-one is going to be buying anything.

I thought exactly that last year – I was proved wrong as there is still plenty selling

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Could you explain please? Are you talking about long term rates - I thought these were about level?

personally I was looking at the action of th currency markets and the mass sell-off of the $ as analysts expect rate rises to end sooner rather than later

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I thought exactly that last year – I was proved wrong as there is still plenty selling

There's plenty 'selling' around here: the problem is, it's always back on the market a few weeks later as the sale falls through.

Meanwhile, sales across the country are at multi-year lows and inventories at multi-year highs. Those are crash conditions, not boom conditions.

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None of which matters if people aren't buying.

The bubble has been created by 'investors' borrowing vast amounts of money because they expected a 20% annual return from house price inflation, and by FTBs desperate to 'get on the ladder' before 20% annual inflation made it impossible for them to ever buy even a crappy one-bed flat. If the 'investors' move to the stock market and prices are even static, then no-one is going to be buying at the bottom of the chain, which means no-one is going to be buying anything.

The flaw in your arguement is it makes sense!!!

The reason everyone has got this bubble wrong is becuase we under-estimate the stupidity of the British Public. I canb guarantee that this bubble will have 4-5 times the casualties of the last major crash. I doubt VERY MUCH that people have checked that they can afford to pay their mortgage if the IR was 10% as RECOMMENDED by every lender!

I HOPE you are right, and I think to a degree you are, but there is still about 5-10% of the populus that will keep propping this up for a little while yet :(

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So begs the question, at least for the shortish term, which is the driver in the decision, economics or politics?

Speculation...selling newspapers? etc.

You dont need to know what you are talking about to guess which way the interest rates are going????

Who knows?!?!

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Interest rates are going to be increasingly irrelevant now that sentiment is turning away from property. If the people who would previously have put money into BTL start putting it into the stock market, then the housing market is dead, dead, dead.

I think it's already happening as the stock market is rising to pre-2000 levels (just before the stock market money moved into property)

But it's not just property that's dead - shares will go the same way and the people reinvesting their money from BTL are blindly putting their money back where it was without thinking as to what has changed in the meantime ie huge debts arising from the property market they profited from

Once the dividend yields start dropping they'll pull out - but where?

Smart money is already there - GOLD!!!

Edited by dnd

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It's like Iraq all over again - I'm sure US/EU was expecting this

It's only gonna take one of these macro-economic events (including blirdflu) to push the economy over the edge...

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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