Rates Must Fall Soon, So Take Out A Tracker

[Jason]

http://observer.guardian.co.uk/cash/story/0,,1707648,00.html

"Interest rates might not have fallen last week, but Cash is reliably informed that four out of nine members of the Bank of England Monetary Policy Committee voted in favour of a cut. Although house prices have started rising again, a further rate cut is undoubtedly necessary, with lenders reporting rapidly increasing levels of 'non-performing loans'. Thankfully, anecdotal evidence suggests people are trying to curtail their spending, taking pressure off inflation rates."

Hmmm... How would they get to know who voted for what? Or are they making it up?

Edited February 12, 2006 by Jason

[Pluto]

http://observer.guardian.co.uk/cash/story/0,,1707648,00.html

"Interest rates might not have fallen last week, but Cash is reliably informed that four out of nine members of the Bank of England Monetary Policy Committee voted in favour of a cut. Although house prices have started rising again, a further rate cut is undoubtedly necessary, with lenders reporting rapidly increasing levels of 'non-performing loans'. Thankfully, anecdotal evidence suggests people are trying to curtail their spending, taking pressure off inflation rates."

Hmmm... How would they get to know who voted for what? Or are they making it up?

It's all spin. Let them reduce interest rates while the rest of the world is increasing them. Sterling will be hit - and hit hard. That's okay if we we're a net exporter, but we aren't.

People are maxed out on credit. More credit isn't the answer.

Let's all go out and get tracker mortgages..yes, yes siree. Are they open on Sunday?

Edited February 12, 2006 by Pluto

[Lord Luggage]

It's all spin. Let them reduce interest rates while the rest of the world is increasing them. Sterling will be hit - and hit hard. That's okay if we we're a net exporter, but we aren't.

People are maxed out on credit. More credit isn't the answer.

Let's all go out and get tracker mortgages..yes, yes siree. Are they open on Sunday?

Hi Pluto

I've asked this question on another thread but can you give me a quick explanation of what happens to sterling if UK rates are lower than, say, US rates?

Thanks

LL

[Dames]

From the blog:

http://www.thisismoney.co.uk/news/article....18&in_page_id=2

Geoffrey Dicks, economist with Royal Bank of Scotland, said: ' Unemployment is rising - ominously - and more important than that, employment is falling - ominously.'

Dames

[undersupply]

Geoffrey Dicks, economist with Royal Bank of Scotland, said: ' Unemployment is rising - ominously - and more important than that, employment is falling - ominously.'

Dames

All very ominous then, Mr Dicks

[Jason]

Hi Pluto

I've asked this question on another thread but can you give me a quick explanation of what happens to sterling if UK rates are lower than, say, US rates?

Thanks

LL

Here you go Lord Luggage:

http://www.housepricecrash.co.uk/forum/ind...ndpost&p=253597

I asked the BoE the very same question.

[Pluto]

Hi Pluto

I've asked this question on another thread but can you give me a quick explanation of what happens to sterling if UK rates are lower than, say, US rates?

Thanks

LL

Very simply:

Interest rates lower = Money flows out of sterling and into other currencies.

The products and services we import becomes more expensive and we need more sterling to buy the same products.

More expensive = inflation

inflation + lowering interest rates = stagflation

Let them reduce interest rates. The government is totally PARANOID about housing. If housing crashes LABOUR (NU or OLD) is toast. They know this and that is why we have all these shananigans with interest rates and mickey mouse inflation numbers.

Edited February 12, 2006 by Pluto

[bubbleturbo]

How reliable do we think this report is??

They cannot pump more money into the economy after the overdose of the last 5 years, can they?

What do we expect to happen if they do??

BTL will become more affordable, etc, etc.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

I suspect this is true - was out with my 2/3 prediction - the Observer and Guardian are both very close to the government.

[Pluto]

I suspect this is true - was out with my 2/3 prediction - the Observer and Guardian are both very close to the government.

If true, savers should get your money out of sterling and into Euros, CAD, Gold, or even (i never thought I would say it) USD.

Do the BoE know about the 1 Trillion + debt we have? The rest of the world knows about it, and they will punish sterling if the BoE lowers interest rates to prop-up our hyped-up ageing property market.

Edited February 12, 2006 by Pluto

[Jason]

IR futures aren't showing a cut:

If anything they are showing a rise in 2007.

[bubbleturbo]

Thats good about the futures.

Surely if this information in the Observer was true and seen to be reliable, the futures would have moved accordingly.

We have got to see another Euro and Dollar decision before the MPC meet again.

Also, the inflation report is out this week.

If it is, as is being reported 2.2%, will this force them to hold? Surely they had access to this at the time of the last meeting?

I will be very pi55ed off if that parasite Gieve has arrived and voted to lower at his first meeting. :angry:

[Golden Shower]

Thats good about the futures.

Surely if this information in the Observer was true and seen to be reliable, the futures would have moved accordingly.

We have got to see another Euro and Dollar decision before the MPC meet again.

Also, the inflation report is out this week.

If it is, as is being reported 2.2%, will this force them to hold? Surely they had access to this at the time of the last meeting?

I will be very pi55ed off if that parasite Gieve has arrived and voted to lower at his first meeting. :angry:

The MPC aren't worried about what happened last month, it's over the next year or two that they are concerned with. Just because other nations are raising IRs doesn't mean we will, if demand is waning so will inflation be (I suspect energy costs are only going to surpress demand overall).

Anyone notice that GBP didn't break above 1.78? There's going to be a raft of data out this week which may clarify things to all.

[Leodhasach]

I'm not buying this...firstly, it'd be the first leak of an MPC minutes I'd ever seen (anyone more knowledgeable please contradict), secondly I'd be stunned if 4 members voted for a cut given the available economic data - given precdicted ECB and Fed rises over the next few months this would surely cause a 10c hit on sterling.

[ToilAndTrouble]

I'd place money on this not being the case. Not enough has changed in the last month to warrant 3 members moving to cut, and my gut feel says that there was be a "suprise" rise in inflation in January.

Will be interesting to see...

T&T

[the end is a bit nigher]

if anything the economic news was better than forecast

if there had been a leak about that many 'cut' votes i'm sure the markets would have got wind of it before the Observer?

edited to put into some form of english!

Edited February 12, 2006 by the end is nigh

[Stanley]

How on earth can the BofE raise rates partly in response to huge increases in house prices and then set about cutting when there original intention as hardly been achieved. In fact from recent press reports prices are still going up. Mervyn King needs to set about smacking a few backsides.

Edited February 12, 2006 by Stanley

[See]

It's just an article about remortgaging to a tracker.

It’s more like an advertisement and should be labelled as such on the page.

[Gavin]

If I had a mortgage at the moment then I would be looking to book a long term fix, not a tracker.

Why?

Simply because the risks appear on balance to be on the upside.

We are only 1% or so off the lowest interest rates in 40 years, yet 10% below where rates were in the early nineties.

It would just make sense to book certainty and negotiate a fix.

The worst thing that could happen would be a Japanese style zero interest rate policy in the future in the UK. Which I can't see.

Balance that with the real possibility of rates returning to or above the long term average and it appears simple from a purely mathematical stance, ignoring your own personal opinion of the general direction of rates.

Chelsea lost yesterday, but all maths still point to them winning the title. :angry: You would have to be a brave/mad speculator to bet on anything different.

Buy a fix not a floater, it makes more sense IMHO.

[Guest Bart of Darkness]

It’s more like an advertisement and should be labelled as such on the page.

On a fervent hope on someone's part?

Let them reduce interest rates. The government is totally PARANOID about housing. If housing crashes LABOUR (NU or OLD) is toast. They know this and that is why we have all these shananigans with interest rates and mickey mouse inflation numbers.

I know that all governments tend to behave the same but Phoney and Prudence are flushing the future of this country down the pan for the sake of keeping in office. Loyalty to party is greater than loyalty to this country (or even to those that voted them into power).

As for Crash Gordon, what's his big priority. To become PM. He's sacrificing everything to feed his own fat ego and bugger the rest of us.

RANT OVER.

[Elizabeth]

It's all spin. Let them reduce interest rates while the rest of the world is increasing them. Sterling will be hit - and hit hard. That's okay if we we're a net exporter, but we aren't.

People are maxed out on credit. More credit isn't the answer.

Let's all go out and get tracker mortgages..yes, yes siree. Are they open on Sunday?

I remember when "trackers" and "offsets" and all those other exciting consumer choices emerged. It was about 1982. The old style fixed morgage for 25 years was thown out he window and a perliferation of new exciting risky morgages were then marketed to the ever so sophisticated, so much better educated 1980s punter. It was the brave new world of capitalist risk & reward (pain of course was never mentioned). In the next 10 years house prices rocketed and then plummeted.

[Milo]

It’s a string of anecdotes followed by product placement.

You would normally only go for a tracker mortgage if you thought interest rates are likely to fall below current rates, or at least remain even over the period of the mortgage (2, 3, 5 years or whatever you choose). There may be a rate cut by spring but I doubt she has a clue where rates will be in 2007 or 8.

She’s turned a possible event into a certain trend. Fairly typical. If there is a rate cut expect to see plenty of use of the plural ie rate cuts, rates are falling, rates are coming down.

[bubbleturbo]

But whats all this about they know the voting pattern - 4 to lower and 5 to hold??

If that is the case, as has been said above, this has become a "I need to be PM and screw the consequences". :angry:

[Portent]

If 4 voted for a cut then I'm very surprised by that. But if true then the chances of that cut are quite high. I think I will be looking to get out of Sterling. As I keep saying... there is a possibility here of stagflation. Cutting rates will lead to a weaker GBP which will result in higher inflation. That in itself will cause people to spend even less or demand more wages. So all I can see on the horizon is falling demand and increasing inflation.

[Mr Blek]

If 4 voted for a cut then I'm very surprised by that. But if true then the chances of that cut are quite high. I think I will be looking to get out of Sterling. As I keep saying... there is a possibility here of stagflation. Cutting rates will lead to a weaker GBP which will result in higher inflation. That in itself will cause people to spend even less or demand more wages. So all I can see on the horizon is falling demand and increasing inflation.

They can't really stimulate the economy much more with lower IR - we're over burdened with credit already which will have the net effect of making inflation shoot up. There is really no option available at the moment that will curb inflation and that could be the real HPC killer. I think the last time we had stagflation was during the 70s with the coming of the winter of discontent.