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apom

Scenario...

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Table of "Property Investors" as the question..

"I understand that you are all very wealthy, but can I see a show of hands who is in substantially more debt then they were before the became so rich..?"

Another

"So lets just say that you take the long time average house price which is about 4 times salary... So the average salary is about £25,000 that makes a three bed semi £100,000.. so if it returned to long term averages.. who would then owe more then their portfolio is worth..?"

Another

"So who thinks that this whole thing has been about housing... I think that it has all been about selling credit.. Since the bank of England split and the MPC's remit has been to keep inflation low long term lending has never been so profitable or attractive.. That has been what has terrified me about taking out a huge loan.. We all know it's not just interst rates.."

They respond with

"pif, lies, don't believe you..."

you respond with..

"I know, it's hard to see, but it is important.. Mervin King said that when people realised that inflation would not be paying of their mortgages that house prices would collapse.. Urrrghhh.. imagine that.. a massive loan that will never shrink with the levels of inflation the market has alswys relied on.. having that loan and watching others but at lower prices.. you would feel an ****.. "

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Another

"So lets just say that you take the long time average house price which is about 4 times salary... So the average salary is about £25,000 that makes a three bed semi £100,000.. so if it returned to long term averages.. who would then owe more then their portfolio is worth..?"

What on earth has that to do with anything?

Most people borrow money to buy a house.

Most people making their first property purchase borrow most of the money.

What people can afford to pay at the bottom of the ladder affects the rest of the ladder.

What people can afford to pay depends mostly on the prevailing level of interest rates.

There is only x% of properties on the market at any one time so the price of property is set by what the highest earning x% of would-be FTBs can afford at prevailing interest rates.

And, if some of them get priced out, then the price is set by what BTL investors can afford to pay (even if they subsidise the rent to pay the mortgage as a contribution to their long-term wealth).

Who cares if the market is above the long term average? The market doesn't. The market functions on what people can afford at any point in time. There isn't some divine mechanism in place that says the market must return to the long term average. Maybe we'll have deflation and IRs down to 2%. Maybe house prices will rise even more. Maybe the long term average in 20 years time will be 6 times earnings.

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What on earth has that to do with anything?

Most people borrow money to buy a house.

Most people making their first property purchase borrow most of the money.

What people can afford to pay at the bottom of the ladder affects the rest of the ladder.

What people can afford to pay depends mostly on the prevailing level of interest rates.

There is only x% of properties on the market at any one time so the price of property is set by what the highest earning x% of would-be FTBs can afford at prevailing interest rates.

And, if some of them get priced out, then the price is set by what BTL investors can afford to pay (even if they subsidise the rent to pay the mortgage as a contribution to their long-term wealth).

Who cares if the market is above the long term average? The market doesn't. The market functions on what people can afford at any point in time. There isn't some divine mechanism in place that says the market must return to the long term average. Maybe we'll have deflation and IRs down to 2%. Maybe house prices will rise even more. Maybe the long term average in 20 years time will be 6 times earnings.

Long term averages are set by very complcated econmics.

Its how the cost of housing sits within the costs of everything else.

Not to believe in long term averages means you do not understand the economic cycle.

Not to understand the economic cycle is to be the cause of it..

:) trust me, you have answered my question with your answer..

What is scary is that you won't see that you ahve

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What on earth has that to do with anything?

Most people borrow money to buy a house.

Most people making their first property purchase borrow most of the money.

What people can afford to pay at the bottom of the ladder affects the rest of the ladder.

What people can afford to pay depends mostly on the prevailing level of interest rates.

There is only x% of properties on the market at any one time so the price of property is set by what the highest earning x% of would-be FTBs can afford at prevailing interest rates.

And, if some of them get priced out, then the price is set by what BTL investors can afford to pay (even if they subsidise the rent to pay the mortgage as a contribution to their long-term wealth).

Who cares if the market is above the long term average? The market doesn't. The market functions on what people can afford at any point in time. There isn't some divine mechanism in place that says the market must return to the long term average. Maybe we'll have deflation and IRs down to 2%. Maybe house prices will rise even more. Maybe the long term average in 20 years time will be 6 times earnings.

Marina,

I'm not sure how old you are (so you may have to do a google for this) Back in the last boom Hong Kongers had the same idea as you.

Banks created 'new' mortages whereby the mortage was taken out in the borrowers name (on their earnings) then passed onto future generations :blink::blink:

So, you were not only mortaging yourself BUT you were also mortaging your children!!! WTF! because the income multipier just wouldnt stack up in one lifetime!

This was the only way they could find around the rising income multiplier and still keep shifting money and property......I have seen all the old con tricks come back with fancy 'new' mortages and when I see this one appear then the game is well and truly up!

NOTE - I somehow doubt they'll ever bring this mortage back....but I said that about self cert, 5x mulitples, cash back, 100% mortages, so I suppose its just possible :lol::lol::lol:

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Long term averages are set by very complcated econmics. Go on! And there's me thinking a long term average is an average of something taken over a long term.

Its how the cost of housing sits within the costs of everything else. No it isn't. Housing is a market all of its own. Current house prices and the fact that house prices are way above their long term average - and have been for a while - causes me to think 'wonder what's causing that?' It causes you to believe they must return to the long term average. What if the long term average is about to become 6 times earnings over the next 25 years. You seem to believe nothing ever changes. It's all a state of flux.

Not to believe in long term averages means you do not understand the economic cycle. Patronising claptrap. You cannot believe or not believe in 'long term averages'. A long term average is a statistic - it does not require belief.

Not to understand the economic cycle is to be the cause of it.. Oh dear! Even more patronising claptrap. Like you can set yourself apart from the economic cycle by not buying a house. Your decision to join, or not join, the property market is of absolutely no consequence. Unless you can convince lots of others to join you, your action is futile.

:) trust me, you have answered my question with your answer..

What is scary is that you won't see that you ahve

What is really scary is that you are so convinced you are right, your mindset is so conditioned by your beliefs in the infallability of your constructs - you never stop for one moment to wonder if you have not taken something into account.

Your belief in economic cycles is touchingly naive. Why not consider, for once, what is different this time? A belief in economic cycles makes no allowance for changes in society or for changes in the elements that make up the cycle.

IF house prices ever return to 3.5 times average salary - or whatever you believe is the long term average (over whatever term you choose, I suppose) - it will be because certain factors caused them to. Not because they have to. IF they don't - say in the next 10 years - then it is reasonable to think the long term average has changed.

Marina,

I'm not sure how old you are (so you may have to do a google for this) Back in the last boom Hong Kongers had the same idea as you.

Banks created 'new' mortages whereby the mortage was taken out in the borrowers name (on their earnings) then passed onto future generations :blink::blink:

So, you were not only mortaging yourself BUT you were also mortaging your children!!! WTF! because the income multipier just wouldnt stack up in one lifetime!

This was the only way they could find around the rising income multiplier and still keep shifting money and property......I have seen all the old con tricks come back with fancy 'new' mortages and when I see this one appear then the game is well and truly up!

NOTE - I somehow doubt they'll ever bring this mortage back....but I said that about self cert, 5x mulitples, cash back, 100% mortages, so I suppose its just possible :lol::lol::lol:

Given current interest rates, current earnings, current house prices and the current demand/supply ratio - eonough people seem to be able to afford property so the market carries on regardless of your beliefs.

I am old enough to have seen it all before and not daft enough to think that history HAS to repeat itself.

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Its how the cost of housing sits within the costs of everything else. No it isn't. Housing is a market all of its own. Current house prices and the fact that house prices are way above their long term average - and have been for a while - causes me to think 'wonder what's causing that?' It causes you to believe they must return to the long term average. What if the long term average is about to become 6 times earnings over the next 25 years. You seem to believe nothing ever changes. It's all a state of flux.

Marina,

Houses are not "all on their own" they sit in the middle of our lives just like bread, milk, sugar, telephones, electricity, gas, petrol prices or anything else for that matter.

You cannot choose to 'remove' housing costs from the overall.

3.5x multiples were not just plucked out of thin air. It is a very accurate % tool for borrowing and lending.

If we choose to ignore 3.5x lets look at it in this scenario:

I earn 12k and want to buy a rolls royce. A bank offers me a loan to buy it.

Q1. Is this practical or realistic?

Q2. can you see a problem in their lending criteria?

This whole 6x salary (or anything above 3.5) only works when you remove the 'home ownership' aspect and turn it into speculation (or what I more accuratley prefer - GAMBLING) on future house prices.

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The economical cycle has been charted since biblical times and has always played out in the same way.

It only works because people are surprised each time although it has happened many times before..

Changes in society?

If by that you mean that people wnat two properties each with one to store their shoes..? then I have heard them all.

This has not been about housing, it's been about credit.

Society has not changed since 1989, we do have more property per head of capita then at any time in the past.

Each boom market has failed, before each failiure there have been many excuses as to how it will be different this time.

If they convince you then so be it.

I am seeing the stagnation and price falls of the start of the re-adjustment of property prices just as I have sexpected it.

Niave? possibly, but I have sudied every argument and facet of the housing market, why it collpased each time before, inflationary measures that will constrain wage increases.. and all the rest..

the classic car market, the dot com bubble.. countless others.

The economic cycle only exists because people are niave, I do not believe that I am.

Credit, or debt, is a commodity and one that has been sold with fantastic success over the last 8 years.

It has not been about property.

when people quote that the market is safe they quote mortage lenders and estate agents.

I quote Mervin Kings and People who have won the noble prize for economics..

I have already considered every argument, and if I cannot be swayed by yours, its because I have heard it before, looked into it in great detail and disregarded it.

since people invented money it has panned out exactly how I predict it will, and since money was invented it has never panned out as you think it will.

not once.

Can it be different this time?

I think it's extremly unlikely.. I would be more surprised if I woke up tomorrow with my face sewn to the carpet..

Oh an dlook into the effect on long term lending that low inflation has..

IR's will rise.

Wage push inflation will not.

Read Mervin Kings comments on inflation and IR's and what makes your loan cost you more..? and what happens when people realise this..

he determines the cost of you borrowing, he has two tools not one.

Read what he says.

Edited by apom

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Who cares if the market is above the long term average? The market doesn't. The market functions on what people can afford at any point in time. There isn't some divine mechanism in place that says the market must return to the long term average. Maybe we'll have deflation and IRs down to 2%. Maybe house prices will rise even more. Maybe the long term average in 20 years time will be 6 times earnings.

Average ? give or take 3 or 4 years earnings........ So we might be able to borrow 10x our earnings to buy a house ? Where is the money going to come from then ??

Deflation and IRs at only 2% AND house prices rising even more ???

The market functions on what people can afford at the time..... Not so sure, and sentiment seems to be geared around a rate rise not happenning.... So what does that tell the great sage marina about affordability ??????

Edited by keepwatching

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Average ? give or take 3 or 4 years earnings........ So we might be able to borrow 10x our earnings to buy a house ? Where is the money going to come from then ??

Deflation and IRs at only 2% AND house prices rising even more ???

The market functions on what people can afford at the time..... Not so sure, and sentiment seems to be geared around a rate rise not happenning.... So what does that tell the great sage marina about affordability ??????

If people understood boom and bust there would not be boom and bust.

People don't understand boom and bust.

Therefor we have it..

Oh, and thinking brown is an economic genius who can fix boom an dbust after the biggest boom in economic history.. that seems dumb..

and thinking that wealth gained from the biggest boom in economic history is real is more convincing with money in your pocket and not debt.

and all booms have lead to a bust, suggesting that the largest ever may not makes people sound stupid

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Marina,

QUOTE - "Given current interest rates, current earnings, current house prices and the current demand/supply ratio"

Thats a lot of 'currents' to base a "its different this time" assumption on.

If I am 'currently' falling out of a window am I:-

1. currently on floor 76?

2. currently heading for floor 75?

3. currently aiming for floor 77?

4. currently heading for floor 75 but will recover my ground shortly and head back to floor 77?

5. curently stagnant at floor 75 (in that one brief nanosecond of time)?

The point of long term trends and averages tells us that people who are "currently" falling from floor 76 should not be thinking that "its different this time" and should maybe use some of this acquired information on the probable outcome.

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If people understood boom and bust there would not be boom and bust.

People don't understand boom and bust.

Therefor we have it..

Oh, and thinking brown is an economic genius who can fix boom an dbust after the biggest boom in economic history.. that seems dumb..

and thinking that wealth gained from the biggest boom in economic history is real is more convincing with money in your pocket and not debt.

and all booms have lead to a bust, suggesting that the largest ever may not makes people sound stupid

I think you are oversimplifying things a bit apom.

The current 'boom' started from a low point in the early 1990s.

This corresponded with a change in monetary policy by the govt. Instead of targetting the £, they started targetting inflation after we fell out of the ERM in 1992 with a severely devalued £.

This new monetary policy has resulted in about 12 years of consecutive growth and stable low interest rates, high employment, and low inflation. This is why GB claims 'no more boom and bust' as inflation has remained low despite the growth (of course it can't last forever...)

This change in policy brought us low rates at a time when house prices were low in 1995 (3.5 times income)

These two factors took a while to sink in after the last crash and the market didn't really pick up until 1999.

So the current HP boom didn't really qualify as a bubble until around 2002/3.

Sure prices have gone up in a bubble since then, but where is the trigger to burst it?

If the govt continue with current monetary policy and throw in some borrowing and public spending then prices could stagnate or even rise slightly between now and the next election.

If things go belly up after this, the govt could go down the inflation and £devaluation route with higher rates.

How will you feel if nominal house prices hardly fall in a downturn (like the 1970s)?

Only one of your boom/busts in the last few decades saw nominal falls...

Edited by Without_a_Paddle

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I think you are oversimplifying things a bit apom.

.

How will you feel if nominal house prices hardly fall in a downturn (like the 1970s)?

Only one of your boom/busts in the last few decades saw nominal falls...

THANK YOU .. YOU HAVE MADE MY POINT EXACTLY.

Oh my god..

Chart average house prices against wages...

That will show you your massive falls.

and show you why in 1989 they strictly managed wage push inflation.

read what Mervin King said about wage push inflation, his warnings that it would not save people from massive debt.

...

THE HEAD OF THE MPC HAS SWORN THAT HIS JOB IS TO PREVENT THE 1970'S FROM HAPPENING AGAIN. THE WAGE PUSH INFLATION CRIPPLED THE COUNTRY.

HOW MANY MORE TIMES MUST THE MAN WHO DECIDES HOW EXPENSIVE YOUR DEBT IS STATE THE VERY THING YOU QUERY HERE BEFORE YOU LISTEN.

HE HAS CALLED IT HIS SOLE RESPONSIBILTY

here is a tip, whenever you see a mortgage lender getting serious airtime on the BBC look into the rest of the news.. there is something subtle out there.

If I thought for one second that wage push inflation would arrive then I would have bought.

so I see where you are coming from.

but I considered a £180,000 mortgage.

like everyone else who would consider this I first studied everything pertinent.

no one would take out a mortgage without spending a few days studying everything said by the MPC about strategy.?????

if you read carefully they promise how they will react.

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Marina,

QUOTE - "Given current interest rates, current earnings, current house prices and the current demand/supply ratio"

Thats a lot of 'currents' to base a "its different this time" assumption on. I think that rather makes my point don't you?

If I am 'currently' falling out of a window am I:-

1. currently on floor 76?

2. currently heading for floor 75?

3. currently aiming for floor 77?

4. currently heading for floor 75 but will recover my ground shortly and head back to floor 77?

5. curently stagnant at floor 75 (in that one brief nanosecond of time)?

The point of long term trends and averages tells us that people who are "currently" falling from floor 76 should not be thinking that "its different this time" and should maybe use some of this acquired information on the probable outcome.

In your rather lame scenario there are no variables. Floor 76 is presumably still in the same place relative to the ground. Now if a load of BTL investors had bought floors 1 to 75 - and moved them to the other side of town - I guess 'it would be different this time'.

Average ? give or take 3 or 4 years earnings........ So we might be able to borrow 10x our earnings to buy a house ? Where is the money going to come from then ?? IF IRs were 1% you could borrow 10x earnings no problem. Why wouldn't you?

Deflation and IRs at only 2% AND house prices rising even more ??? Well isn't that what caused the boom? Low IRs and very little inflation in the economy. Deflation of a lot of things.

The market functions on what people can afford at the time..... Not so sure, (wonder what it does function on then) and sentiment seems to be geared around a rate rise not happenning.... So what does that tell the great sage marina about affordability ?????? A bit of mild sarcasm there - have you a feeling you think I might be right.

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The economical cycle has been charted since biblical times and has always played out in the same way.

It only works because people are surprised each time although it has happened many times before..

Changes in society?

If by that you mean that people wnat two properties each with one to store their shoes..? then I have heard them all.

This has not been about housing, it's been about credit. No, it's been about a certain sector of society believing that borrowing money to invest in property will secure their future.

Society has not changed since 1989, we do have more property per head of capita then at any time in the past. Yes it has. Property has almost turned into an investment commodity. BTL was virtually unheard of in 1989. Sure people owned property. Property that they had owned for generations. They lived off the income. Now it is COMPLETELY DIFFERENT - with tens of thousands of wallies sucked in by Inside Track.Each boom market has failed, before each failiure there have been many excuses as to how it will be different this time. Yes - but this one might run out of steam, rather than fail, because of ongoing low interest rates and ongoing BTL investment - leaving your generation priced out forever. You are working on what you see happening in your area. In my area we had a correction - now we have what looks like a bull market again. If they convince you then so be it.

I am seeing the stagnation and price falls of the start of the re-adjustment of property prices just as I have sexpected it. So did I, but, do yourself a favour and take a drive to East Berkshire. Count the For Sale signs against the Sold signs. Sold outnumbers For Sale about 10 to 1. Unless IRs rise soon, this will happen in your area. You like long term trends and stuff. ALWAYS the UK regions have followed the London and South East property market. This time is no different. The regions are about 2 years behind the London/South East market. Believe me, we've had our crash and we're now back in boom. When you get your crash - starting about now by the sounds of things - get in and get yourself the best deal you can. In a couple of years time your market will boom again.

Niave? possibly, but I have sudied every argument and facet of the housing market, why it collpased each time before, inflationary measures that will constrain wage increases.. and all the rest..

the classic car market, the dot com bubble.. countless others.

The economic cycle only exists because people are niave, I do not believe that I am. If you think the world never changes you are naive. It's one thing learning from the mistakes of history - another to believe that history must repeat itself. Do you foresee another war between us and Germany - or us and France? If not, why not? History teaches us that, at regular intervals, we go to war with Germany or France. But, something has changed. Equations have variables. You need to consider how they might vary to predict outcome.

Credit, or debt, is a commodity and one that has been sold with fantastic success over the last 8 years.

It has not been about property. People have borrowed to invest in property. They have not borrowed to invest in any other asset. Therefore this has been about property.

when people quote that the market is safe they quote mortage lenders and estate agents.

I quote Mervin Kings and People who have won the noble prize for economics.. There has never been a central banker in history that could control markets.

I have already considered every argument, and if I cannot be swayed by yours, its because I have heard it before, looked into it in great detail and disregarded it. Good for you. I predict you will never own a house and you'll be renting all your life.

since people invented money it has panned out exactly how I predict it will, and since money was invented it has never panned out as you think it will.

not once.

Can it be different this time? Err ... UK and US interest rates almost at parity - yet no downward pressure on sterling. Odd isn't it? Different from what has happened over the last 50 years.

I think it's extremly unlikely.. I would be more surprised if I woke up tomorrow with my face sewn to the carpet..

Oh an dlook into the effect on long term lending that low inflation has..

IR's will rise. Weird, in the past we have high IRs when we have high inflation. Doesn't your mate Mervin keep saying that he will use IRs to control inflation? I think he means that when inflation rises - he will increase the cost of borrowing to damp down demand. That is what he means isn't it?

Wage push inflation will not. Apart from the public sector - for most peope wage rises are a dream. Many people are earning the same now, in real terms, as they were 15 years ago. But, with the cost of borrowing one third what it was then - no wonder people have bigger mortgages and there has been massive HPI.

Read Mervin Kings comments on inflation and IR's and what makes your loan cost you more..? and what happens when people realise this.. NOBODY CARES! That's what you just don't get. Most people are not aware of inflation eroding their mortgage debt etc. They just take on a mortgage and hope they can pay it. Simple as. And, as long as they keep doing that, this market will, by and large, sustain itself.

he determines the cost of you borrowing, he has two tools not one. No central banker in history has determined the cost of borrowing. The currency markets do that. Many have tried - but all have failed.

Read what he says. Read it, understood it, digested it. Not sure you have though.

Edited by Marina

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marina used to post some interesting stuff, but this latest pseudo-bullcrap is just sad.

Marina, you have to remember that the money has to come from somewhere.

The current econmic setup doesn't allow for this scenario to continue much longer, as IRs starting to rise around the world amply demonstrate to anyone with the eyes (and brains) to see.

It really isnt rocket science - THERE IS NO SUCH THING AS FREE MONEY

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THANK YOU .. YOU HAVE MADE MY POINT EXACTLY.

Oh my god..

Chart average house prices against wages...

That will show you your massive falls.

and show you why in 1989 they strictly managed wage push inflation.

read what Mervin King said about wage push inflation, his warnings that it would not save people from massive debt.

...

THE HEAD OF THE MPC HAS SWORN THAT HIS JOB IS TO PREVENT THE 1970'S FROM HAPPENING AGAIN. THE WAGE PUSH INFLATION CRIPPLED THE COUNTRY.

HOW MANY MORE TIMES MUST THE MAN WHO DECIDES HOW EXPENSIVE YOUR DEBT IS STATE THE VERY THING YOU QUERY HERE BEFORE YOU LISTEN.

HE HAS CALLED IT HIS SOLE RESPONSIBILTY

AFAIK The head of the MPC has one duty. That is to head a committee that sits once a month to decide interest rates.

They look at the market trends and vote for an interest rate that aims to meet a predetermined target of inflation set by the Treasury.

That's the key point here. "set by the Treasury"

He's effectively a puppet. A puppet making promises he can't possibly keep if the treasury move the inflation target or decide to change monetary policy.

He doesn't decide how expensive your debt is, the chancellor/Treasury does as they have the real control in monetary policy.

and show you why in 1989 they strictly managed wage push inflation.

Hang on, the economy was booming out of control in 1988 caused by the Lawson boom. inflation was a serious problem caused by Lawsons poor monetary policy and tax busting budgets.

He raised rates from 8% to 15% in a few months to cool off the rising inflation. You can interpret that as strictly managing wage push inflation if you like, I saw it more as a desperate measure to cool rampant inflation as a whole.

Today is VERY DIFFERENT. The economy is not overheating, and inflation is not out of control.

BTW it is common practice to increase the money supply ahead of an election to keep the voters happy. Increased money supply = inflation = wage inflation (with higher rates).

If you are looking to wait for a dip in inflation adjusted prices then you are going to be waiting a LONG time before you (significantly) outperform someone buying today with a 10 year fixed at 4.7%.

You may never catch up if nominal prices hardly fall due to wage inflation.

If inflation goes up then rates will follow, making your future mortgage more expensive in terms of monthly payments compared to today's fixed rate borrower.

Its happened so many times before, I can't see how you can dismiss it based on the promises of a puppet.

Edited by Without_a_Paddle

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AFAIK The head of the MPC has one duty. That is to head a committee that sits once a month to decide interest rates.

They look at the market trends and vote for an interest rate that aims to meet a predetermined target of inflation set by the Treasury.

That's the key point here. "set by the Treasury"

He's effectively a puppet. A puppet making promises he can't possibly keep if the treasury move the inflation target or decide to change monetary policy.

He doesn't decide how expensive your debt is, the chancellor/Treasury does as they have the real control in monetary policy.

Hang on, the economy was booming out of control in 1988 caused by the Lawson boom. inflation was a serious problem caused by Lawsons poor monetary policy and tax busting budgets.

He raised rates from 8% to 15% in a few months to cool off the rising inflation. You can interpret that as strictly managing wage push inflation if you like, I saw it more as a desperate measure to cool rampant inflation as a whole.

Today is VERY DIFFERENT. The economy is not overheating, and inflation is not out of control.

BTW it is common practice to increase the money supply ahead of an election to keep the voters happy. Increased money supply = inflation = wage inflation (with higher rates).

If you are looking to wait for a dip in inflation adjusted prices then you are going to be waiting a LONG time before you (significantly) outperform someone buying today with a 10 year fixed at 4.7%.

You may never catch up if nominal prices hardly fall due to wage inflation.

If inflation goes up then rates will follow, making your future mortgage more expensive in terms of monthly payments compared to today's fixed rate borrower.

Its happened so many times before, I can't see how you can dismiss it based on the promises of a puppet.

Okay, this is clearly off topic and should be moved at once to the About House Price Crash forum.

marina used to post some interesting stuff, but this latest pseudo-bullcrap is just sad.

Marina, you have to remember that the money has to come from somewhere.

The current econmic setup doesn't allow for this scenario to continue much longer, as IRs starting to rise around the world amply demonstrate to anyone with the eyes (and brains) to see.

It really isnt rocket science - THERE IS NO SUCH THING AS FREE MONEY

Bit sad - I used to agree with you so I was your mate - now I don't - I'm talking rubbish. Hoping for something a bit more incisive than this.

The money has to come from somewhere. Good point. Where has the money come from that has seen house prices treble in the last x years?

Answer, from increased borrowing.

Is anyone stopping people from borrowing money now?

Have interest rates risen preventing people from borrowing now?

Is there any sign that people don't want to borrow now - to buy houses?

Has the government made noises about the money supply?

Has the pound fallen against other currencies due to our printing money?

That would be no, no, no, no and no.

Open your eyes. Engage the brain.

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Cool.

:)

you can't see it, but you have explained inflation.

I have explained deflation.

You come up with numbers and the rest.

I respond that what I am suggesting has been guaranteed by Gordon Brown and Mervin King.

In speaches.

They say exactly how they will respond.

It's not sublte

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Is anyone stopping people from borrowing money now?

Have interest rates risen preventing people from borrowing now?

Is there any sign that people don't want to borrow now - to buy houses?

Has the government made noises about the money supply?

Has the pound fallen against other currencies due to our printing money?

That would be no, no, no, no and no.

Open your eyes. Engage the brain.

Will you be buying soon ?

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Is anyone stopping people from borrowing money now?

Have interest rates risen preventing people from borrowing now?

Is there any sign that people don't want to borrow now - to buy houses?

Has the government made noises about the money supply?

Has the pound fallen against other currencies due to our printing money?

That would be no, no, no, no and no.

Open your eyes. Engage the brain.

Marina,

This helps explain why house prices as a multiple of average income are at historically high levels but the question that most people on this forum are interested in is if and why they will stay at such levels. Your last point is particularly interesting - the pound hasn't fallen against other currencies since most of the world's main central bankers have also maintained a low interest rate policy in the aftermath of the collapse in the tech bubble (Japan excepted as they have maintained a zero rate policy for many years to deal with the aftermath of their late 1980s/early 90s property/stock market bubble) - perhaps not surprisingly, they too have had soaring property markets. But this situation appears to be changing, which is why it may not be reasonable to expect interest rates to be maintained at currently low levels. Central bankers, particularly the Fed and the ECB but even the BoJ, are talking a tightening bias. As the fed, ECB and eventually BoJ hikes, the BoE will also hike or face a major currency depreciation. GB's need to fund an ever-expanding public sector is likely to exacerbate the situation. So, that we have historically high prices now is explicable but there's also good reason to think that this may change as global interest rates revert to what in the eyes of central bankers appear to be more "neutral", sustainable levels...

Rgds,

BB

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Cool.

:)

you can't see it, but you have explained inflation.

I have explained deflation.

You come up with numbers and the rest.

I respond that what I am suggesting has been guaranteed by Gordon Brown and Mervin King.

In speaches.

They say exactly how they will respond.

It's not sublte

Are you serious?

You BELIEVE everything a politician tells you? Politicians make speeches to win voters not to make promises. (did TB and GB get your vote last time?)

GB has already cheated on his Golden Rule promise and he will cheat again.

..and do you really think the govt will take us down the path of deflation as a 'solution'?

Let's see, the banks get shafted by deflation, the economy gets shafted by deflation, homeowners (voters) get shafted by deflation. Why would the govt do this?

Who wins with deflation? a few priced out FTBers with some cash in the bank?

Dream on...

Edited by Without_a_Paddle

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  • 338 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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