GeneCernan Posted October 18, 2021 Share Posted October 18, 2021 19 minutes ago, oatbake said: A lot of money can be made in a cyclical market. Perpetual HPI is not the most efficient way to fleece the proles. It's worked for years and years. Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted October 18, 2021 Share Posted October 18, 2021 1 minute ago, GeneCernan said: It's worked for years and years. Take most graphs of shares....they were all steady pre 1998. When Blair handed power to the banks. They are fleecing people, deliberately I expect. e.g. Quote Link to comment Share on other sites More sharing options...
henry the king Posted October 18, 2021 Author Share Posted October 18, 2021 1 hour ago, Speed1987 said: What are they currently? I thought base rate was at 0.1%... 😂. Which is why even modest raises make difference. IR could go up by 10x by August if the markets are correct. And their job is to be correct Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted October 18, 2021 Share Posted October 18, 2021 This is pretty shocking when you see it and realise you've been done up like a kipper The bOE will not raise IRs to any extent, they will send them -ve to make sure they're investments dont fall, meanwhile, the rest of us will be f**ked. Quote Link to comment Share on other sites More sharing options...
GeneCernan Posted October 18, 2021 Share Posted October 18, 2021 Just can't see how it's different this time. As a wise man (probably) once said, "If you do what you've always done, you'll get what you always got". If all you've ever wanted to do was push house prices ever upwards, and your actions have always worked, why change things? Quote Link to comment Share on other sites More sharing options...
Timm Posted October 19, 2021 Share Posted October 19, 2021 5 hours ago, TheCountOfNowhere said: This is pretty shocking when you see it and realise you've been done up like a kipper The bOE will not raise IRs to any extent, they will send them -ve to make sure they're investments dont fall, meanwhile, the rest of us will be f**ked. I like that graph, but the green lines identify the wrong event. What actually caused the HPI take off are the early events identified in the red annotation. 1. Bankers let off the leash (deregulation) 2. BTL mortgages (AKA assured short-hold tenancies) 3. IO/self cert mortgages It's a bit silly to say that the Govt were really good at keeping house prices stable to incomes until BOE independence, when most of the measures keeping them high since 2008 (FLS, Term Funding, Help to Buy, Stamp Duty Cut etc) were Govt measures. Quote Link to comment Share on other sites More sharing options...
PeanutButter Posted October 19, 2021 Share Posted October 19, 2021 https://www.theguardian.com/business/2021/oct/19/interest-rates-dilemma-puts-spotlight-on-bank-of-england-credibility Interest rates dilemma puts spotlight on Bank of England’s credibility As markets bet on an increase, economists give their view after Andrew Bailey’s mixed messages UK bond yields soar as markets brace for interest rate rise A good balanced article summarising the positions and risks. Quote Link to comment Share on other sites More sharing options...
Social Justice League Posted October 19, 2021 Share Posted October 19, 2021 IR's should rocket and if that wipes out indebted liar loan types, so what. Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted October 19, 2021 Share Posted October 19, 2021 2 hours ago, PeanutButter said: https://www.theguardian.com/business/2021/oct/19/interest-rates-dilemma-puts-spotlight-on-bank-of-england-credibility Interest rates dilemma puts spotlight on Bank of England’s credibility As markets bet on an increase, economists give their view after Andrew Bailey’s mixed messages UK bond yields soar as markets brace for interest rate rise A good balanced article summarising the positions and risks. The risks are only risks because of their own deliberate actions. Quote Link to comment Share on other sites More sharing options...
Gigantic Purple Slug Posted October 19, 2021 Share Posted October 19, 2021 2 hours ago, Social Justice League said: IR's should rocket and if that wipes out indebted liar loan types, so what. It also wipes out the young kids who have scraped together everything to try to get a home for themselves and their families. Not much "social justice" in that. Quote Link to comment Share on other sites More sharing options...
Zzzzzzzzzzzzzzzzzzzzzzzzzz Posted October 19, 2021 Share Posted October 19, 2021 (edited) 17 hours ago, Flat Bear said: Hello Gruffydd Whether you are right or wrong in the short-term external forces will eventually force the cost of fiat currency up. As you are fully aware the BOE have no influence or no tools to change the oncoming financial situation. There are some posters who I had thought of being alarmist about hyperinflation but in my world, I am seeing a 100% inflation rate without any reason for it not to increase, so maybe they are the realists. There are a number of posters who insist the CPI figures are accurate and that prices in their local supermarket and the amount of money it cost to fill up their car is still very cheap, and prices have not changed for years, but I am certain this cannot continue. For example, I have been supplying companies directly involved in the infrastructure of distribution of all the larger supermarket chains including ASDA, TESCO and MORRISONS. Yes, we have had to increase prices drastically to them, but this was not the real problem. The real problem is we can no longer supply them at all due to global shortages and complete breakdowns in supply chains. This may not affect people immediately but next year we will see at least a proportion of superstores just close down as the business models for many are unviable. Yes, some may try to increase prices by 30 or 40% but even this will not be enough to prevent closures. There are numerous examples like this with many businesses deciding it is no longer worth trading. The recent tax hikes did not help and many of the people who really run the economy disappear. Oddly I have just spent a day off working away at university looking at supply chains - burrowing into the research on what's going on. I am no supply chain expert but your post captures the complexity of what is going on out there right now... so much volatility, feedback loops, and so on. Then of course there's wage inflation which may kick in and drive prices... picking up its own momentum due to policy decisions, Covid, etc - then of course there's a major shift in behaviours - online shopping and so on. One of my colleagues keeps mentioning he's seeing the "biggest reallocation of assets since WW2" but to be honest I have no idea what he means, or which datasets he's working from (haven't had time to interrogate him lol). Edited October 19, 2021 by gruffydd Quote Link to comment Share on other sites More sharing options...
Pmax2020 Posted October 19, 2021 Share Posted October 19, 2021 4 minutes ago, Gigantic Purple Slug said: It also wipes out the young kids who have scraped together everything to try to get a home for themselves and their families. Not much "social justice" in that. That depends. My wife and I waited til our early 30s to start a family once our careers were established and we had a decent amount of equity behind us. Our first property was the cheapest/smallest money could buy. I don’t sympathise young couples that’ve missed out a few rungs of the ladder and are sitting in big ‘executive’ new builds with horrendous LTVs. I’m not bitter, I’ve just spent many years staying put in houses while I saved/prepared for the next. Yes, in an ideal world we could all afford to live in nice big family homes in our early 20s but for obvious reasons it can’t work that way. My wife and I are the best off we’ve ever been but still we refuse to upgrade in spite of friends doing so. We want to clear a bit more of the current mortgage and get the bank balance even higher. I know I sound self righteous but I’m just try to keep my family safe and secure. Quote Link to comment Share on other sites More sharing options...
Gigantic Purple Slug Posted October 19, 2021 Share Posted October 19, 2021 3 minutes ago, Pmax2020 said: That depends. My wife and I waited til our early 30s to start a family once our careers were established and we had a decent amount of equity behind us. Our first property was the cheapest/smallest money could buy. I don’t sympathise young couples that’ve missed out a few rungs of the ladder and are sitting in big ‘executive’ new builds with horrendous LTVs. I’m not bitter, I’ve just spent many years staying put in houses while I saved/prepared for the next. Yes, in an ideal world we could all afford to live in nice big family homes in our early 20s but for obvious reasons it can’t work that way. My wife and I are the best off we’ve ever been but still we refuse to upgrade in spite of friends doing so. We want to clear a bit more of the current mortgage and get the bank balance even higher. I know I sound self righteous but I’m just try to keep my family safe and secure. Well I'm pretty sure people on the bottom rungs who can only just about afford the cheapest place possible because prices are outrageous in their particular area would say exactly the same thing. Bottom line is that IR rises yes will hurt the over leveraged like BTL landlords, but also people on the bottom rung that didn't want to rent, couldn't get a council flat and ended up in an overpriced shoebox because they couldn't afford anything else and wanted a home to keep their family "safe and secure". The people who made the most money out of housing over the past 20 years will probably be sitting pretty because their homes will be mortgage free. I doubt though that the government will allow mass repos though because they would only have to house people somewhere else and the homes aren't available. Over leveraged BTL will get rinsed though. Quote Link to comment Share on other sites More sharing options...
Clarky Cat Posted October 19, 2021 Share Posted October 19, 2021 6 minutes ago, Gigantic Purple Slug said: Well I'm pretty sure people on the bottom rungs who can only just about afford the cheapest place possible because prices are outrageous in their particular area would say exactly the same thing. Bottom line is that IR rises yes will hurt the over leveraged like BTL landlords, but also people on the bottom rung that didn't want to rent, couldn't get a council flat and ended up in an overpriced shoebox because they couldn't afford anything else and wanted a home to keep their family "safe and secure". The people who made the most money out of housing over the past 20 years will probably be sitting pretty because their homes will be mortgage free. I doubt though that the government will allow mass repos though because they would only have to house people somewhere else and the homes aren't available. Over leveraged BTL will get rinsed though. Theoretically, all recent mortgages should have been stress tested to 6-7% so a rise in the base rate to 1-2% will make things less comfortable for the people who stretched to buy but shouldn't cause mass repossessions. If house prices drop and they're in negative equity then they'll end up stuck on the SVR which would be 4.5-5.5%. an SVR of 5.5% would lead to about a 50% increase in repayments on a 25 year mortgage from a typical 1.5% 2yr fix. There'd be more of an issue for people with longer terms, but then the affordability checks should have looked at this. The energy price issue may make things a lot tighter, but the real problem would be if there was a concurrent recession with mass redundancies at the same time. There is the SMI scheme that could be extended in this eventuality. Quote Link to comment Share on other sites More sharing options...
Pmax2020 Posted October 19, 2021 Share Posted October 19, 2021 1 hour ago, Gigantic Purple Slug said: Well I'm pretty sure people on the bottom rungs who can only just about afford the cheapest place possible because prices are outrageous in their particular area would say exactly the same thing. Aside from London, what areas are you referring to? You can comfortably buy a 3 bed place for just 3 or 4x an average couples salary, almost anywhere in the UK. Or at least within a 30-45 minute commute of any job in the UK. Dont get me wrong, I’m clearly referring to areas that are less desirable but it’s a stepping stone while you accrue equity. Quote Link to comment Share on other sites More sharing options...
Huggy Posted October 19, 2021 Share Posted October 19, 2021 3 hours ago, Gigantic Purple Slug said: It also wipes out the young kids who have scraped together everything to try to get a home for themselves and their families. Not much "social justice" in that. Oh no, it's absolutely fine for the kids. The plummeting value of houses due to mega-high interest rates 🤞 will ensure their savings grow by a nice robust amount and they will be able to snap up a bargain from some over-indebted slumlord "entrepreneur" or equity-withdrawing Guardian reading boomer in a couple of years. Massive amounts of social justice if this comes to pass Quote Link to comment Share on other sites More sharing options...
Social Justice League Posted October 19, 2021 Share Posted October 19, 2021 (edited) 3 hours ago, Gigantic Purple Slug said: It also wipes out the young kids who have scraped together everything to try to get a home for themselves and their families. Not much "social justice" in that. True, but no one forced them to get desperate and borrow over the odds for an overpriced house. We should never have allowed this position in the first place where shelter is used as a weapon against the 99%. Shameful. Creating a ridiculous housing ponzi that will probably take down the whole economy is a disgraceful way to run any "developed, civilized" country. Edited October 19, 2021 by Social Justice League Quote Link to comment Share on other sites More sharing options...
Gigantic Purple Slug Posted October 19, 2021 Share Posted October 19, 2021 11 minutes ago, Social Justice League said: True, but no one forced them to get desperate and borrow over the odds for an overpriced house. We should never have allowed this position in the first place where shelter is used as a weapon against the 99%. Shameful. Creating a ridiculous housing ponzi that will probably take down the whole economy is a disgraceful way to run any "developed, civilized" country. I don't think your average person in the street thinks too much, they just borrow as much as the bank will let them because that is deemed ok "beacuse the bank let me have it". The bit in bold I agree with. One of the governments jobs is to manage the housing market in the best interests of the population. If it isn't there to do things like that why bother with it ? Quote Link to comment Share on other sites More sharing options...
Trump Invective Posted October 19, 2021 Share Posted October 19, 2021 7 hours ago, Gigantic Purple Slug said: It also wipes out the young kids who have scraped together everything to try to get a home for themselves and their families. Not much "social justice" in that. So what? People renting have been screwed for years Quote Link to comment Share on other sites More sharing options...
Horseradish Posted October 19, 2021 Share Posted October 19, 2021 5 hours ago, Huggy said: Oh no, it's absolutely fine for the kids. The plummeting value of houses due to mega-high interest rates 🤞 will ensure their savings grow by a nice robust amount and they will be able to snap up a bargain from some over-indebted slumlord "entrepreneur" or equity-withdrawing Guardian reading boomer in a couple of years. What happens if they keep IRs low and let inflation run high (in order to inflate out a lot of the national debt), and the youngsters savings get obliterated while those with a mortgage get the debt inflated out? Quote Link to comment Share on other sites More sharing options...
Jimmyjammy001 Posted October 19, 2021 Share Posted October 19, 2021 9 hours ago, Gigantic Purple Slug said: It also wipes out the young kids who have scraped together everything to try to get a home for themselves and their families. Not much "social justice" in that. They've decided to take on a risk where many others who would of been in the same position as them and would have not put them selves in that much risk, if it fails for them, then unlucky, other people shouldn't have to suffer as a result of their risk taking Quote Link to comment Share on other sites More sharing options...
Fred1981 Posted October 19, 2021 Share Posted October 19, 2021 19 minutes ago, Horseradish said: What happens if they keep IRs low and let inflation run high (in order to inflate out a lot of the national debt), and the youngsters savings get obliterated while those with a mortgage get the debt inflated out? This is what's going to happen. It's called Financial repression? (MoneyWeek go on about it). Quote Link to comment Share on other sites More sharing options...
Huggy Posted October 19, 2021 Share Posted October 19, 2021 19 minutes ago, Horseradish said: What happens if they keep IRs low and let inflation run high (in order to inflate out a lot of the national debt), and the youngsters savings get obliterated while those with a mortgage get the debt inflated out? That would be a bad result. The kids have their savings wiped out, they also don't get a house, and the debt junkies don't get that sweet lesson about how borrowing stupid amounts of money is a bad idea. Quote Link to comment Share on other sites More sharing options...
dpg50000 Posted October 20, 2021 Share Posted October 20, 2021 So, we have RPI at 4.9% - https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/czbh/mm23 Looks like IR rises are, as predicted, extremely unlikely (bar a token one) - we've had higher inflation than that in, I think, 2010-11 and the BOE just "looked through it". Quote Link to comment Share on other sites More sharing options...
“Nasty Piece of work” Posted October 20, 2021 Share Posted October 20, 2021 18 hours ago, Gigantic Purple Slug said: One of the governments jobs is to manage the housing market in the best interests of the population. But they don’t. it is “managed” for the Tories to remain in power, by fluffing the voter base by employing fictional riches, and to maximise Tory Party funds by handing wealth to their donors. It is a direct cost to the population, who generally are to thick to see they are being shafted. It is run for V.I.’s, not the population, who are merely paying. Quote Link to comment Share on other sites More sharing options...
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