Jump to content
House Price Crash Forum
pobby

Interest Rates

Recommended Posts

I have been aware of interest rates over the last 30 years or so.I think that during the 70s + 80s the average was about 8 or 9%.Since the mid 90s they have been far lower this.

Forgive me if I have got this completely wrong,but these new,lower rates,is it because ,in general,world interesr rates are much lower?Is it possible that there could be a return to around the 8% mark?

Share this post


Link to post
Share on other sites

If world interest rates rose then the UK would have to follow too... it is though unclear to me what would be the trigger for rates to return to these levels.

It's very complicated so I think I will bow out and leave this question to some other distinguished member of the forum who might have a clue.

Thank you.

Share this post


Link to post
Share on other sites

I have been aware of interest rates over the last 30 years or so.I think that during the 70s + 80s the average was about 8 or 9%.Since the mid 90s they have been far lower this.

Forgive me if I have got this completely wrong,but these new,lower rates,is it because ,in general,world interesr rates are much lower?Is it possible that there could be a return to around the 8% mark?

Who knows what the future has in store. At present it appears unlikely we'll see an 8% repo rate. In five to ten years time things may be different...

One things for sure, an 8% rate would decimate landlords...

:o

Share this post


Link to post
Share on other sites

One things for sure, an 8% rate would decimate landlords...

Bearing in mind how many people have jumped on the BTL craze since 2004 They're already teetering on the brink of disaster. A small Increase in rates will push 'em over the edge - then watch the "pack of cards" tumble! :lol:

Edited by cupidstunt

Share this post


Link to post
Share on other sites

world interest rates have indeed been trending lower for a number of years now.

we're going to see higher rates than most have forecast in the months ahead. we could see the world economy doing reasonably well for some time yet. however, when recession comes round, and it will, interest rates i believe will collapse and deflation will be a threat. that's when house prices will also collapse. this could all take anything between two and five years to unfold.

Share this post


Link to post
Share on other sites

"Even in the US, where economic data were mixed this week, there were fears that the Federal Reserve may increase interest rates by more than expected."

The article makes interesting reading: Interest rate outlook unsettles global markets

Someone on the forum recently posted a graph highlighting the relationship between UK/US interest rates.

It showed UK interest rates riding above those of the US.

Share this post


Link to post
Share on other sites

keep your eye on Japan, the BOJ and the yen currency. that's all far more important than a few retailers going down here and there.

some analysts believe Asian buying of US assets has suppressed long end interest rates by up to 1.00%. if that money starts moving back home rates will move higher and the dollar lower regardless of Fed policy.

Edited by spoon

Share this post


Link to post
Share on other sites

I have been aware of interest rates over the last 30 years or so.I think that during the 70s + 80s the average was about 8 or 9%.Since the mid 90s they have been far lower this.

Forgive me if I have got this completely wrong,but these new,lower rates,is it because ,in general,world interesr rates are much lower?Is it possible that there could be a return to around the 8% mark?

We may see a gradual narrowing of the spread between CB rates leading to a lack of liquidity in markets, currency fluctuations, inflation and a return to the unpredictable rates of old.

Share this post


Link to post
Share on other sites

I have been aware of interest rates over the last 30 years or so.I think that during the 70s + 80s the average was about 8 or 9%.Since the mid 90s they have been far lower this.

Forgive me if I have got this completely wrong,but these new,lower rates,is it because ,in general,world interesr rates are much lower?Is it possible that there could be a return to around the 8% mark?

I think you would have to be quite brave to totally rule out rates of 5-6% over the next 3 or 4 years. It doesn't look like rates are changing very fast at the moment. Maybe you need a "currency run" to get fast changes in interest rates. For example, if a lot of people started dumping dollars, the Fed target rate might go up pretty fast.

Longer than 4-5 years, I have no idea really. You could see rates go back up to 7-8% (the "historical average") or down to 1-2% ("globalization means it's different this time"), I really have no clue.

frugalista

Share this post


Link to post
Share on other sites

Over the next 4-5 years I think we're going to see global rates go quite a bit higher than 7-8%: there are vast trillions of dollars of new credit flooding the global economy, and that either has to be wiped out with high rates or it will continue to cause major inflation.

Share this post


Link to post
Share on other sites

Over the next 4-5 years I think we're going to see global rates go quite a bit higher than 7-8%: there are vast trillions of dollars of new credit flooding the global economy, and that either has to be wiped out with high rates or it will continue to cause major inflation.

Higher than 8%.wow-----how many ftbs and btls is that going to put out of the game.So would I be right in saying that some one with say a IO mortgage for 200k would be paying a minimum of 16k a year in interest?That would mean approx 23k a year income pre tax.A lot of my friends{50s age group} dont even earn that p.a.

TTRTR will have to carefully look at his finances!!!!!!!!!!!!!!!!!!

The more I read on this forum the more I realise just how crazy/dangerous all this is.

In my family I have members mewing like crazy,saving nothing,endowment shortfalls and I think that they think I am the odd one.

See,I dont have a brand new BMW,what a git I must be, I even have savings,bit of a loser really cause I have a terrace house and fool of fools its almost paid for.

Not very exciting but I tend to sleep at night------bring on the crash!!!!!!!!!!!!!!!!!

Share this post


Link to post
Share on other sites

I have been aware of interest rates over the last 30 years or so.I think that during the 70s + 80s the average was about 8 or 9%.Since the mid 90s they have been far lower this.

Forgive me if I have got this completely wrong,but these new,lower rates,is it because ,in general,world interesr rates are much lower?Is it possible that there could be a return to around the 8% mark?

Interest rates are meant to be lower now according to monetary theory. However, this depends on how "independent" the BoE is and how credible its claim to control inflation via interest rates is. Arguably, the BoE could be more independent, measurement of inflation could be better and the application of a more independent BoE to a truer inflation measure would be yielding different results.

Clearly there is also an international dimension to this and whilst the ECB and Fed are following a similar strategy, there is no doubt that the Feds aggressive lowering of interest rates following 9:11 had a political (and hence not independent) dimension.

So to answer your question, probably not very satisfactorily, I would say that interest rates should be higher than they are now but not as high as they were in the 70s and 80s. I would not consider 4.50% to be the top of the cycle. This of course assumes that the BoE retains its credibility, otherwise we're back to 8%.

To find out more look up "rational expectations hypothesis" in a monetary economics textbook.

Share this post


Link to post
Share on other sites
This of course assumes that the BoE retains its credibility, otherwise we're back to 8%.

The BoE has credibility?

Share this post


Link to post
Share on other sites

The BoE has credibility?

We will see. I have read an article suggesting that all these bubbles have the fingerprints of central bankers all over them. Central banks are not the only perpetrators, since the credit market requires both willing lenders and willing borrowers.

What I do think is that this whole situation resembles the classic Columbo format in that we (on HPC) have witnessed the crime in full and we are awaiting the innevitable point at which the criminals get their comeupance...

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.