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Realistbear

Interest Rate Cut Very Unlikely

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http://uk.biz.yahoo.com/moneyweekly/prexma...gebargains.html

"You'll need to act soon if you're after a fixed rate mortgage deal, however. Although lenders are still pricing their offers competitively, the swap rates which they base their fixed rate pricing on are about 0.3 per cent higher than a month ago. Ray Boulger, of mortgage broker John Charcol, says
the rise in the swap rate is a result of the city becoming less confident that the Bank of England base rate will be cut in the short-term.
It currently stands at 4.5 per cent. "

Appears that underlying rates are headed up instead of down. Too much loose credit is placing excessive strain on the money supply making BoE tightening unavoidable. Without lower IR to help there is not much left holding the bubble together. A further deterioration in the employment picture may precipitate house prices over the edge of the cliff sooner rather than later.

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IMHO IR will do little save the economy from the direction it is taking. The key is employment and the trend is embedded. Once confidence is shaken through massive job losses even 2% off IR will do little to prevent a market crash of Biblical proportions. Japan was a good example of this.

Edited by Realistbear

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IMHO IR will do little save the economy from the direction it is taking. The key is employment and the trend is embedded. Once confidence is shaken through massive job losses even 2% off IR will do little to prevent a market crash of Biblical proportions. Japan was a good example of this.

Come on, at 2% lower and in an economic crisis, I might even drop my rents to keep the employed people with me (rather than another landlord) and still have plenty of money to pay down my loans (if I choose to).

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Guest Charlie The Tramp

Come on, at 2% lower and in an economic crisis, I might even drop my rents to keep the employed people with me (rather than another landlord) and still have plenty of money to pay down my loans (if I choose to).

And another reason we wouldn’t be banking on a cut anytime soon is because the good Governor is clearly still worried about high property prices – and runaway prices in equities, bonds, gold and just about any other asset you care to mention.

Mr King, like his US counterpart Alan Greenspan, can’t work out why long-term interest rates are so low. The interest rate on long-term UK government bonds is at its lowest level for over 50 years. The real interest rate on a 20-year inflation-linked UK gilt is now 1%, compared to a range of 2% to 4% over the past 25 years.

World markets have become "frothy" or overvalued because investors seeking returns and growth have pushed up asset prices, the Financial Times on Wednesday reported Bank of England Deputy Governor Andrew Large as saying.

"It seems to me, based on my experience, that we're in a position that feels frothy," Large, who leaves his post at the bank this month, told the newspaper in an interview.

Without directly quoting Large, the report said high prices in bond, equity, commodity and housing markets had left the financial system more vulnerable to a potential crisis.

The newspaper paraphrased Large as saying that banks and investors might be underestimating the risk of a shock to the financial system.

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  • 301 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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