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UK Interest rates... where will it go within 12 months? I suspect 2-4%


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6 hours ago, zugzwang said:

 

They wanted to stop a recession becoming a depression, hence the borrowing. Most of the new Treasury debt has been QE'd, those excess reserves will be retained within the banking system *forever* i.e. the inflationary implications are nil. Maybe there's a spike in consumer inflation as the economy returns to full capacity, maybe there's not. The Chinese have a vast inventory of shiny crap to shift and may have to discount a lot of it to get it away. The furlough cash is being consumed frivolously not invested productively, after it's gone the housing market will be even more precariously leveraged than before. Wages follow productivity, both are going nowhere.

Evidence…? I thought those on furlough bought their food to survive with it given they had no wages for months?

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13 minutes ago, scottbeard said:

Evidence…? I thought those on furlough bought their food to survive with it given they had no wages for months?

Eh? They were on 80% or whatever of their normal wages but without any costs associated with going to work....??

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57 minutes ago, Si1 said:

Eh? They were on 80% or whatever of their normal wages but without any costs associated with going to work....??

Do you spend 20% of your post tax income on going to work?!

remember a lot of these are minimum wage pub workers - not stockbrokers commuting into London from Surrey who save on train season tickets whilst wfh 

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2 minutes ago, scottbeard said:

Do you spend 20% of your post tax income on going to work?!

Do you include the many  costs of convenience - where, for example, you engage trades rather than do the job yourself; buy takeaways rather than cook - and generally accept inefficiency in one's personal life - in order to put "go to work" first?

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5 minutes ago, A.steve said:

Do you include the many  costs of convenience - where, for example, you engage trades rather than do the job yourself; buy takeaways rather than cook - and generally accept inefficiency in one's personal life - in order to put "go to work" first?

Let’s wind back to the actual point - it was stated above that furlough cash “is being consumed frivolously”.

I await any evidence or justification that supports this, given that most of it was paid to low paid hospitality workers who don’t have money to waste.

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9 minutes ago, scottbeard said:

Let’s wind back to the actual point - it was stated above that furlough cash “is being consumed frivolously”.

I await any evidence or justification that supports this, given that most of it was paid to low paid hospitality workers who don’t have money to waste.

I am sure they will be spending it into the local economy, not in asset purchase or hiding it away being of no use at all to anyone.;)

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38 minutes ago, scottbeard said:

Let’s wind back to the actual point - it was stated above that furlough cash “is being consumed frivolously”.

I await any evidence or justification that supports this, given that most of it was paid to low paid hospitality workers who don’t have money to waste.

I'm talking about the property stampede.

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18 hours ago, Fromage Frais said:



Property is not the worst asset during inflations as you can jack the rent up every xx months or so.  However there cannot be anything worse than a 40 year mortgage at low x percent with the slow steady death of rate rises.

 

This is true, but what if 10,000,000 foreigners with no ties to the UK decide they can get a better deal elsewhere...you can only jack the rent up if you have some idiot to pay it.

There is so many unknowns right now.

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8 hours ago, zugzwang said:

 

They wanted to stop a recession becoming a depression, hence the borrowing. Most of the new Treasury debt has been QE'd, those excess reserves will be retained within the banking system *forever* i.e. the inflationary implications are nil. Maybe there's a spike in consumer inflation as the economy returns to full capacity, maybe there's not. The Chinese have a vast inventory of shiny crap to shift and may have to discount a lot of it to get it away. The furlough cash is being consumed frivolously not invested productively, after it's gone the housing market will be even more precariously leveraged than before. Wages follow productivity, both are going nowhere.

I won't say I'm an expert on economics, but didn't QE lead to increased asset prices after the 2008 crash? 

Secondly, isn't the main target of the virus over 60s, whom often own assets. Freeing up money for their gran kids to get on the ladder?

Hasn't the government introduced 95% state backed mortgages?

Hasn't the banks given mortgage holidays and no repossessions for 1 year? (Likely to be extended, when the next wave arrive).

Aren't the banks now starting to hold property on their books?

Hasn't the UK household savings pot, increased significantly although there is alot of inequality.

Hasn't the US printed trillions of dollars handing out free cheques?

Hasn't the UK and world money supply drastically increased?

Hasn't minimum wage, gone up 50% in the last 10 years....

Yea the economy is ******ed, but the government have said, house prices will not come down. Actually we are going to push them up and encourage borrowing.

It's interesting actually, as I myself am going to borrow 40k, as the money is so cheap and house prices have gone up around 15% in my area. Gonna build an extension, 30sqm, should increase the value of my house by 80k.

House price inflation is is then.

Edited by Speed1987
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@zugzwang

The elites position, is clear as day. If they wanted the economy and housing market to balance, they would of allowed capitalism to take its natural course.

The middle class would be selling up in London at a major loss right now, with prices well below the 2013 boom. Possibly 40%+ knocked off, banks and building soiceties falling.

Furlough is the government preventing a house price crash, not only to feed people. We can feed people with food banks and provide clothing for free. They are trying to maintain wealth equality, wouldn't you if you had that power and were a landlord or extremely wealthy.

Ultimately furlough cash will find its way into housing, without doubt. Harry gets furlough cash, decides to save, builds an extension. Builder gets paid, saves and buys a house. That simple. By increasing the money supply, eventually a percentage of that will end up within housing.

 

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28 minutes ago, Speed1987 said:

I won't say I'm an expert on economics, but didn't QE lead to increased asset prices after the 2008 crash? 

Secondly, isn't the main target of the virus over 60s, whom often own assets. Freeing up money for their gran kids to get on the ladder?

Hasn't the government introduced 95% state backed mortgages?

Hasn't the banks given mortgage holidays and no repossessions for 1 year? (Likely to be extended, when the next wave arrive).

Aren't the banks now starting to hold property on their books?

Hasn't the UK household savings pot, increased significantly although there is alot of inequality.

Hasn't the US printed trillions of dollars handing out free cheques?

Hasn't the UK and world money supply drastically increased?

Hasn't minimum wage, gone up 50% in the last 10 years....

Yea the economy is ******ed, but the government have said, house prices will not come down. Actually we are going to push them up and encourage borrowing.

It's interesting actually, as I myself am going to borrow 40k, as the money is so cheap and house prices have gone up around 15% in my area. Gonna build an extension, 30sqm, should increase the value of my house by 80k.

House price inflation is is then.

 

Alternatively, it's a just-so story to legitimise your VI?

House prices are already unaffordable in much of the country, especially where the jobs are. The only thing that might enable them to go higher is the subdivision of the existing stock into ever smaller units. Obviously, that's been an undeclared element of Tory housing policy for many years, facilitated by mass immigration, HMOs etc. With 3,000,000 Hong Kong Chinese potentially on the way (some of them here already) that threat hasn't been defused. It would represent the last throw of the dice, however.

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2 hours ago, zugzwang said:

 

Alternatively, it's a just-so story to legitimise your VI?

House prices are already unaffordable in much of the country, especially where the jobs are. The only thing that might enable them to go higher is the subdivision of the existing stock into ever smaller units. Obviously, that's been an undeclared element of Tory housing policy for many years, facilitated by mass immigration, HMOs etc. With 3,000,000 Hong Kong Chinese potentially on the way (some of them here already) that threat hasn't been defused. It would represent the last throw of the dice, however.

A story to legitimise my interests... so what I've just stated is a story? Or are all my points facts.

Common dude, you've just lived through it, you can see what those with power are doing.

I highly doubt that our government has handed out all the cash, to just say 'go on then let it crash now'. We've had our fun... 

House prices are not unaffordable, two people on minimum wage can easily buy in Manchester or Birmingham. House prices are unaffordable in London and other High end areas. You simply do not buy there, you start else where and work your way up.

House prices will go higher due to inheritance, immigration, relocating, cheaper mortgages, lower rates government, government policies.

The most obvious is increased money supply.

I strongly disagree, that this is the last throw of the dice, people have been saying that since the 1990s..

Edited by Speed1987
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1 minute ago, Speed1987 said:

A story to legitimise my interests... so what I've just stated is a story? Or are all my points facts.

Common dude, you've just lived through it, you can see what those with power are doing.

I highly doubt that our government has handed out all the cash, to just say on go on then let it crash now. We've had our fun... 

House prices are not unaffordable, two people on minimum wage can easily buy in Manchester or Birmingham. House prices are unaffordable in London and other High end areas. You simply do not buy there, you start else where and work you're way up.

House prices will go higher due to inheritance, immigration, relocating, cheaper mortgages, ower rates government, government policies.

The most obvious is increased money supply.

I strongly disagree, that this is the last throw of the dice, people have been saying that since the 1990s..

 

Oh, I don't doubt what the Tories' intentions are.

Hpi forever. Mass immigration. China First.

Rent seekers, always and forever.

But there's a reason the national debt is now £2.3 trillion when it was £300 billion twenty years ago and that's because free market, neoliberal economics doesn't work! We've managed to escape the consequences of that failure only by adding an additional £100bn to the national debt every year, much of which has been spent on market-defying house price subsidies.

Manifestly unsustainable.

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5 minutes ago, zugzwang said:

 

Oh, I don't doubt what the Tories' intentions are.

Hpi forever. Mass immigration. China First.

Rent seekers, always and forever.

But there's a reason the national debt is now £2.3 trillion when it was £300 billion twenty years ago and that's because free RIGGED market, neoliberal economics doesn't work! We've managed to escape the consequences of that failure only by adding an additional £100bn to the national debt every year, much of which has been spent on market-defying house price subsidies.

Manifestly unsustainable.

Fixed.

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On 11/05/2021 at 17:57, TheCountOfNowhere said:

This might come in handy for a few people in the next couple of years

 

http://www.n-ram.co.uk/helpful-tools-calculators/rate-rise-calculator

 

e.g.

image.png.692dad22986b0777299c6d1095b15ab0.png

 

image.png.871063a04b7df8b888330e789f9b6c64.png

 

£200 a month increase if rates go up 2%, that 3% rise is more meaty though, £300.

That's not bad at all.  The Boe have been refusing to up rates all this time and that's all it would affact people ?

If anyone is that close to being unable to afford their mortgage they shouldn't be allowed to borrow quite frankly.

Gonna be a lot of upset people 2023 onwards.

 

 

I think I got stress tested up to 10% when I took out my mortgage, not fun at that level but could still pay it. 

For those that bought a house on the help to buy estates and then skipped down the car dealers for a couple of PCPs they might struggle but even then only when they come off the fixed rates and then they could just sit on interest only for a time. 

The bigger impact would be on the wider economy, rising rates would just suck disposal income out of pockets. 

A final point is that if we do have a time of higher inflation it would erode the mortgage debt providing people are coving the interest at a minimum.

Interesting chart though.

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19 minutes ago, zugzwang said:

 

Arctic vs Antarctic, so in essence the same!

 

An interesting analogy given that the two appear the same, but one has land underneath and one does not and they are therefore polar opposites.

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31 minutes ago, Unmoderated said:

A final point is that if we do have a time of higher inflation it would erode the mortgage debt providing people are coving the interest at a minimum.

Only if the mortgagee's wages rise.

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21 minutes ago, Locke said:

An interesting analogy given that the two appear the same, but one has land underneath and one does not and they are therefore polar opposites.

They're both barren wildernesses inimical to life.

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1 hour ago, Locke said:

Only if the mortgagee's wages rise.

Pretty much a given in a services based economy.

Explain how prices can continually rise without wage increases and where this has happened in the world?

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13 hours ago, scottbeard said:

Let’s wind back to the actual point - it was stated above that furlough cash “is being consumed frivolously”.

I await any evidence or justification that supports this, given that most of it was paid to low paid hospitality workers who don’t have money to waste.

I guess it depends upon perspective - but, I'd say, the low-paid usually waste the money they do get... they spend it on things that don't improve their lives in the medium-to-long term... for example: rent and interest on loans.  The poor seldom invest wisely - and the rich do everything in their power to keep it that way.

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