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I Told You So

5.0% Ir

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I'm convinced that when the BoE raise the base rate to 5.0% the market will start to fall very quickly, and in light of the recent news on IR's thats probably not that far off.

If we cast our mind back to the day the base rate hit 4.75% there were noticeable falls in prices, with the drop to 4.5% and the expectation of even lower rates there was a mild recovery (I hate to admit it) but I still think prices are lower than the peak of summer 04 (London).

Which is why 5.0% for me is such a crucial point and I'm also convinced that GB and the BoE think rates would have to go to 6% or 7% to cause a full blown crash and won't realise what they've done until its to late.

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I'm convinced that when the BoE raise the base rate to 5.0% the market will start to fall very quickly, and in light of the recent news on IR's thats probably not that far off.

If we cast our mind back to the day the base rate hit 4.75% there were noticeable falls in prices, with the drop to 4.5% and the expectation of even lower rates there was a mild recovery (I hate to admit it) but I still think prices are lower than the peak of summer 04 (London).

Which is why 5.0% for me is such a crucial point and I'm also convinced that GB and the BoE think rates would have to go to 6% or 7% to cause a full blown crash and won't realise what they've done until its to late.

I agree..

also remember.. look at the IR's you are talking about..

for most of history 5% would have been unbelievable..

Now we talk about massive economic turmoil when it goes back to what is essentially below the long term average

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Could be an important psychological tipping point if rates do go to 5% as the VI's main argument gets blown out of the water.

That said, I'm not sure that this is a necessary condition for a crash. Current interest rates do not justify the current speculative bubble, as I've said many times before, all that is needed is for the BTL brigade to realise that they aren't going to see the gains that they have expected.

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I agree..

also remember.. look at the IR's you are talking about..

for most of history 5% would have been unbelievable..

Now we talk about massive economic turmoil when it goes back to what is essentially below the long term average

I remember 5% was my old man's "preferential" fixed rate when he worked for the Woolwich in the 80s. It was a hell of a perk then...

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Could be an important psychological tipping point if rates do go to 5% as the VI's main argument gets blown out of the water.

That said, I'm not sure that this is a necessary condition for a crash. Current interest rates do not justify the current speculative bubble, as I've said many times before, all that is needed is for the BTL brigade to realise that they aren't going to see the gains that they have expected.

As far as I can see the crash is well underway..

I know 20 people waiting.. for every person sho thinks buying is a good idea..

The press spins halftruths and outright lies..

a chunk of this is about the sentiment out there..

There is sentiment, but that is only with those who have bought, I see no reflection of this with the current generation..

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I'm convinced that when the BoE raise the base rate to 5.0% the market will start to fall very quickly, and in light of the recent news on IR's thats probably not that far off.

If we cast our mind back to the day the base rate hit 4.75% there were noticeable falls in prices, with the drop to 4.5% and the expectation of even lower rates there was a mild recovery (I hate to admit it) but I still think prices are lower than the peak of summer 04 (London).

Which is why 5.0% for me is such a crucial point and I'm also convinced that GB and the BoE think rates would have to go to 6% or 7% to cause a full blown crash and won't realise what they've done until its to late.

You talk about 5% IRs as a certainty. Most economists curreltly disagree with you. Not saying it is impossible but it does not look likely anytime soon (and yes and know the arguments regarding relations to other currencies.)

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And some said the Dow would go to 36,000 :)

That is a meaningless response that can be used to attack anything you do not agree with.

Interest rates may move up at some point but so long as the relevant MPC inflation measures remain unchanged, there is no reason to expect an upward movement anytime soon. If you think this comment is on a par with a suggestion that a particular index will triple in a short time then maybe should you get back down the pub and stop confusing what you want with your absolute certainty in the future.

Edited by Scooter

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Interest rates will (or should) only go up when inflation is on the horizon

At the moment the CPI has dropped to 1.9 (I think) –and only if the BOE can see this racing off will they do anything

The CPI is fixed therefore I think we may be through the worse of the inflation- then again who knows but the BOE don’t see it as a problem

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You talk about 5% IRs as a certainty. Most economists curreltly disagree with you. Not saying it is impossible but it does not look likely anytime soon (and yes and know the arguments regarding relations to other currencies.)

Forget 5% that's going to happen this year. 10% is where we are heading mark my words. Too much fiat money that needs to be reigned in - not just the uk - but all over the world.

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Forget 5% that's going to happen this year. 10% is where we are heading mark my words. Too much fiat money that needs to be reigned in - not just the uk - but all over the world.

Anyone can say 10% - without giving a time – when is it going to go back to 10% -

pay back is coming as you say – but it’s likely to be years – we would need Japan and china to change their polices – it’s starting but it will take a long time

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Interest rates may move up at some point but so long as the relevant MPC inflation measures remain unchanged, there is no reason to expect an upward movement anytime soon.

I agree with you, but they're not the MPC's inflation measures are they? The ONS will continue to play its games, however if our currency is tanking then it will eventually drive inflation and rate rises, the question is how long we can fool the markets. It doesn't matter if you can fudge the figures if people are pulling out of sterling and consumers are left with less disposable income.

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Could be an important psychological tipping point if rates do go to 5% as the VI's main argument gets blown out of the water.

That said, I'm not sure that this is a necessary condition for a crash. Current interest rates do not justify the current speculative bubble, as I've said many times before, all that is needed is for the BTL brigade to realise that they aren't going to see the gains that they have expected.

Just look at the snippet in the BLOG about prices in Estonia.

Denmark and Estonia

In neighbouring Denmark the changing nature of the mortgage market has given a boost to prices.

Previously people there took out home loans for between 20 and 30 years, often at fixed rates.

Now the mortgage market is looking more like that of the UK.

Increasingly residents can take out mortgages where the interest rate varies annually, or where only interest is payable each year.

That means would-be home owners can borrow more money than before and at cheaper rates too, thus driving up prices.

In Estonia, a country with just 1.3 million people and a small property market, the big influence has been overseas buyers.

"A few hundred overseas investors have had a big impact on a small market," said the author of the Rics report, Professor Michael Ball of Reading University.

This is the real cause of HPI its nothing to do with DEMAND. I am tracking certain areas around me via www.ononemap.com and I can tell you that in the 5 chosen Postcodes (about 10miles square) only 4 houses have sold in 2 weeks!!!

The market is saturated with properties!!!!

Also on the Wirral in Sykes Waterhouse in Bromborough Village they are reporting the market as VERY SLOW. Even heard it in work today!!! Sentiment IS CHANGING! JUST NEED THAT 5% IR TO give it a push!!!!

TB

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I was under the impression a couple of percent rise in IR, would up the *average recent* mortgage by £150-£300 per month depending on how much was borrowed. If rates do go up this year and continue through into 2007, surely the forced selling would bring the market down like a ton of bricks?

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Gordon Brown has gotten us into a right mess. He should have bit the bullet back in 2001. If I.R's go up further it gets political, it exposes the mess he's made to the general public, it stops him from getting into no.10.

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Guest horace

To quote Mrs T, "You can`t buck the market".

I think Gordon will learn this the hard way. The problem is that we`ll learn it with him.

horace

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Guest Bart of Darkness

NOTHING bad will happen until Gordon's in No 10.

I'm hoping that time will run out for Gordy before that happens.

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10% soon? Dont confuse what you would like to see with what is likely

There's a tsunami of vast trillions of dollars of cheap money swooshing around the world causing economic bubbles everywhere it goes. That was easy to ignore while it was going into tech stocks and house prices, but now it's going into commodities, and massive commodity inflation cannot be hidden for long: it rapidly cuts into everyone's disposable income.

There are now two choices: much higher interest rates to destroy that flood of money, or much higher inflation, leading to either high wage inflation or a large drop in standard of living. If the banks are even remotely honest about trying to restrict inflation then rates will probably be over 10% in the next few years. You cannot possibly wipe up the largest global bubble ever by setting interest rates near historical lows!

Edited by MarkG

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Hmmm. He's untouchable you know... I just CANNOT see Gordon looking shame-faced ever. He'll escape from this rich, smug and evil like the Neo-Marxist champagne-socialist mafia gangster he is.

I don't like him you see. Or any NULaba mobster/liar.

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Maybe they will go up with the corresponding year :-)

2006 - 6%

2007 - 7%

2008 - 8%

2009 - 9%

2010 - 10%

OR>>>>>>>>>>>>>>Maybe they will go down with the corresponding year :-)

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OR>>>>>>>>>>>>>>Maybe they will go down with the corresponding year :-)

Good idea, all we need to do now is work out a way to make time run backwards! :rolleyes:

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  • 302 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%



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