Jump to content
House Price Crash Forum
Sign in to follow this  
Realistbear

Much Higher U S I R Now Seen As Okay For Banks

Recommended Posts

http://today.reuters.com/news/newsArticle....BANKS-RATES.xml

NEW YORK (Reuters) - U.S. banks and their investors should worry that
short-term interest rates may rise more than expected,
but the concern might prove overblown if growing economic momentum pushes long-term rates higher as well, letting banks charge more on loans.
Indeed, financial companies' shares have performed well as rates have risen, and may already reflect expectations for even higher rates.

Looks like the banks are pricing in 5% at next Fed meeting. If the banks can profit its going to happen.

Share this post


Link to post
Share on other sites

Hey RB, you have TEN threads about interest rates running today.

Can't you absorb them into fewer threads? It pushes other stuff off the page...

That many? Must have got carried away with the flood of good news today. Will try to keep to one thread-good idea. Tx. :)

Share this post


Link to post
Share on other sites

If we start agreeing with him he might stop

Personally I think he is dead right – anyone know if he is a bull or a bear?

bull.

Today, 06:31 PM

19. Interest Rates are now lower and more stable.

20. We are not handcuffed to the ERM and have more control over our monetary policy.

21. The economy is not rapidly overheating as it was in the late 1980s when Lawson shadowed the £ against the German DM.

22. We have a Chancellor who wants to be Prime Minister for more than a year. (HPC is not a votewinner)

23. See 20. This time we can devalue sterling to cause inflation to erode debt. Just like in the 1970s. = Little or no nominal falls in house prices.

This post has been edited by Without_a_Paddle: Today, 06:41 PM

Share this post


Link to post
Share on other sites

I’m a little surprised at the sudden dawning realisation by the Fed that inflation and growing ‘momentum’ in the US economy will require them to consider rising rates (don’t they read the papers?) . They have addressed the credit crunching yield curve inversion conundrum with hawkish spin (something Greenspam failed to do). I suppose that if the Fed is just jaw boning the markets will pile back in and invert the curve again.

I think that the Fed knows that the game is up for the debt addled American bubble economy and that by tweaking rates now they can claim that they have induced a controlled consumer slowdown (recession). The worlds central bankers wouldn’t like to give the impression that they are effectively helpless in the face of the mighty trade/business cycle.

The coming recession would have happened anyway, interest rates hikes or not, we’ve had a decade of malinvestment, sufficient sheep have sacrificed their financial futures to the Banks, they can now get on with flushing the accumulated crap out of the system. But we really need to come up with a better way of managing global economic affairs.

Share this post


Link to post
Share on other sites

23. See 20. This time we can devalue sterling to cause inflation to erode debt. Just like in the 1970s. = Little or no nominal falls in house prices.

Which begs the question – is it better to be in debt so that it can eroded – or have savings that get eroded?

Share this post


Link to post
Share on other sites

Which begs the question – is it better to be in debt so that it can eroded – or have savings that get eroded?

Is this an STR question?

Surely the answer is it is better NOT to STR if inflation rises and house prices stay static in nominal terms.

It would be better to stay in the property and remortgage a long term fixed rate loan now.

The STR would lose out on two sets of fees and removal costs and would then have to buy back in at the same price but with a much higher interest rate. The rent would tend to rise with inflation.

It would be a lose, lose situation for the STR who sells and banks the cash.

But then none of us have a crystal ball to see if this £ devaluation scenario will really happen.

Share this post


Link to post
Share on other sites
Which begs the question – is it better to be in debt so that it can eroded – or have savings that get eroded?

It's better to have savings that don't get eroded. This isn't the 70s anymore, you can move your life savings abroad in minutes.

Share this post


Link to post
Share on other sites

Is this an STR question?

Surely the answer is it is better NOT to STR if inflation rises and house prices stay static in nominal terms.

It would be better to stay in the property and remortgage a long term fixed rate loan now.

The STR would lose out on two sets of fees and removal costs and would then have to buy back in at the same price but with a much higher interest rate. The rent would tend to rise with inflation.

It would be a lose, lose situation for the STR who sells and banks the cash.

But then none of us have a crystal ball to see if this £ devaluation scenario will really happen.

I agree, STR to cash (particulalry sterling) can easily fail. I think the essential move for STR to work is to continue to reinvest the capital. After all, an STRer is treating his home puely as an investment, so usual practices should apply i.e. diversify out of booming riskier assets into cheaper, safer assets - and repeat ad nauseam. Noone knows the future, all you can do is play the risk/reward card.

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...
Sign in to follow this  

  • 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.