Dames Posted January 20, 2006 Share Posted January 20, 2006 Only post a snippett , cant be getting in trouble from IC Michael Taylor, of Lombard Street Research, said: "There is clearly no justification for a cut in interest rates......" .....The gap between monetary growth and base rates, at 7.5 percentage points, is now at a 17-year high. This has for years been a good predictor of rate moves in the following two years... - and the best bit ......This is because strong monetary growth often leads to expectations of higher inflation and output, to which the Bank of England responds by raising rates. If the post-1986 relationship continues to hold, rates will rise to 6.75 per cent by early 2008..... D Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted January 20, 2006 Share Posted January 20, 2006 (edited) So basically we can look forward to higher HP's, higher rates, higher rents & higher everything..... Are you listening STR's? Edited January 20, 2006 by Time to raise the rents. Quote Link to comment Share on other sites More sharing options...
Guest Charlie The Tramp Posted January 20, 2006 Share Posted January 20, 2006 If the post-1986 relationship continues to hold, rates will rise to 6.75 per cent by early 2008..... Oh dear. Quote Link to comment Share on other sites More sharing options...
Converted Lurker Posted January 20, 2006 Share Posted January 20, 2006 Oh dear. Charlie, please expand? Quote Link to comment Share on other sites More sharing options...
Samuel Whiskers Posted January 20, 2006 Share Posted January 20, 2006 So basically we can look forward to higher HP's, higher rates, higher rents & higher everything..... Are you listening STR's? Listening all right. Clearly you must be joking - interest rates at 6.75% will not maker higher HP's but lower on account of mass defaults, forced sales etc. Quote Link to comment Share on other sites More sharing options...
Guest Charlie The Tramp Posted January 20, 2006 Share Posted January 20, 2006 Charlie, please expand? Unless there is a real shock I would expect them not to pass the historical neutral of 6% within the next 2 years. Quote Link to comment Share on other sites More sharing options...
Come On Down Posted January 20, 2006 Share Posted January 20, 2006 Unless there is a real shock I would expect them not to pass the historical neutral of 6% within the next 2 years. Give examples of a real shock? Agreed though I think they will stay low for several years - until China start spending. Quote Link to comment Share on other sites More sharing options...
the end is a bit nigher Posted January 20, 2006 Share Posted January 20, 2006 So basically we can look forward to higher HP's, higher rates, higher rents & higher everything..... Are you listening STR's? lower house prices - plenty to chose from - a better return on our savings higher rates will affect everyone (except those whose rent includes rates - everyone I know) higher rents? - with all those cheap houses - don't think so higher number of reposessions - definitely Quote Link to comment Share on other sites More sharing options...
Golden Shower Posted January 21, 2006 Share Posted January 21, 2006 Hmmm, higher inflation. So who in their right mind is going to be holding onto cash? Quote Link to comment Share on other sites More sharing options...
Peach Posted January 21, 2006 Share Posted January 21, 2006 If interest rates rise enough to cause a mass default, in turn causing a HPC. Won't the added interest make the monthly payment to service the mortgage just as expensive as it is now? Quote Link to comment Share on other sites More sharing options...
planit Posted January 21, 2006 Share Posted January 21, 2006 If interest rates rise enough to cause a mass default, in turn causing a HPC. Won't the added interest make the monthly payment to service the mortgage just as expensive as it is now? Exactly, welcome to the downward spiral! Quote Link to comment Share on other sites More sharing options...
Darth_Calculus Posted January 21, 2006 Share Posted January 21, 2006 (edited) If interest rates rise enough to cause a mass default, in turn causing a HPC. Won't the added interest make the monthly payment to service the mortgage just as expensive as it is now? Hi Peach You are right, but do not forget that interest rates can fluctuate, whereas your debt (amount borrowed) will stay the same. For example, I would much rather borrow a smaller amount at a high interest rate, than a massive amount on a low interst rate. If you borrow a large amount at a low interst rate, there is a greater risk that interest rates will rise rather than fall, and that asset prices will fall rather than rise. Look at the early nineties, when interest rates were at 15%. I would rather buy a house for £80k @ 15%, than a house now at £240k @ 5%. For simplicities sake the initial payments might be the same, but you could expect the £80k debt to stay the same, but the interest rate reduce from 15% (as has happened), whereas, if you had bought a house in early 2004 when base rates were 3.5%, you are taking a huge risk that IRs would increase back to their historic average of 6-7%, thus having a £200k mortgage at 7% Edited January 21, 2006 by Darth_Calculus Quote Link to comment Share on other sites More sharing options...
the end is a bit nigher Posted January 21, 2006 Share Posted January 21, 2006 Hmmm, higher inflation. So who in their right mind is going to be holding onto cash? Very much depends on how the higher inflation is tackled - if it is met with rising interest rates, I would be quite happy to - if it isn't then I would look elsewhere, but it wouldn't be property as that would be falling in value both notionally and in real-terms and probably not stocks as higher inflation is not really business friendly, so what does that leave? Quote Link to comment Share on other sites More sharing options...
oracle Posted January 22, 2006 Share Posted January 22, 2006 (edited) Listening all right. Clearly you must be joking - interest rates at 6.75% will not maker higher HP's but lower on account of mass defaults, forced sales etc. 6.75% are we talking UK rates or US rates?...for UK I think 5.5% is feasible ...I suspect there is a big shift in tax take going on....the shift being from employer to employee. IR's will be kept fairly low,but it will be direct and indirect tax on the individual that will be heavily raised. ....so company profits will look ok,but the uk public will be paying a vastly higher percentage of their income to the taxman while business pays less.....and the over-regulation of business will get sorted out by the tories,leaving a new 1980's style scenario in 2009(probably) Edited January 22, 2006 by oracle Quote Link to comment Share on other sites More sharing options...
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