I Told You So Posted April 13, 2006 Share Posted April 13, 2006 I can't believe that there are still some numpties on here clinging on to the rate cut theory. Its not going to happen, forget about it book yourselves in for some therapy, a massage maybe or perhaps a lobotomy. MUPPETS Quote Link to comment Share on other sites More sharing options...
Rodders Posted April 13, 2006 Share Posted April 13, 2006 Sack your forecaster Rodders, the £ forward curve for 1wk deposits on 1/5/07 (close as you'll get to a forward for base rates) is 4.85% - if your forecaster is willing to fund me forward at 3.75%, I'm a buyer in any size he likes markets fluctuate every part of every day. Forecasts do not. Quote Link to comment Share on other sites More sharing options...
karhu Posted April 13, 2006 Share Posted April 13, 2006 Actually I meant to write more - my main feeling is that it's not that easy to apply some of the lessons of the past to the current global situation. We've never quite been here before, so I'm not sure anyone quite knows what will happen. It's going to be hard for anyone to turn the clock back and retreat into protectionism or devaluation, but who knows. Oh come on now. Don't give me that sitting on the fence stuff. Nothing would ever get done if CEOs thought like that. Yes the world is unpredictable, but you can have a stab, take a position. At the moment, the consensus view has to be that the next move in interest rates is up. Quote Link to comment Share on other sites More sharing options...
Magpie Posted April 13, 2006 Share Posted April 13, 2006 Hawks against Doves then eh? To some degree, but I think the hawk view here is partly driven by wishful thinking and justification. I'm certainly not predicting imminent falls. Also if people are waiting to buy a house, is it really wise to pray for higher IRs - mightn't you end up worse off by waiting even if prices do fall a bit? I suppose the "dream scenario" is short term higher interest rates leading to HP crash (and global recession), followed by falling interest rates, so that bargains can be picked up at even lower rates. Might cause worldwide misery and devastation, but not to worry, I've got a cheap house... Quote Link to comment Share on other sites More sharing options...
BearishBull Posted April 13, 2006 Share Posted April 13, 2006 markets fluctuate every part of every day. Forecasts do not. Mate, I can't begin to tell you how seriously bogus that forecast is. The UK 10yr Gilt market seems to have been fluctuating very much in one direction over the past six weeks. Reminds me of that old Yazoo tune... Quote Link to comment Share on other sites More sharing options...
Magpie Posted April 13, 2006 Share Posted April 13, 2006 Oh come on now. Don't give me that sitting on the fence stuff. Nothing would ever get done if CEOs thought like that. Yes the world is unpredictable, but you can have a stab, take a position. At the moment, the consensus view has to be that the next move in interest rates is up. I've already taken a stab by buying in spite of the possible downsides, so I'm off the fence in that respect. My prediction is that it's all going to be a bit less dramatic than people think. Over the next year or so, rates might go up slightly or fall slightly, but not to any massive degree. If house prices do fall that will only be one factor among many. Quote Link to comment Share on other sites More sharing options...
karhu Posted April 13, 2006 Share Posted April 13, 2006 I've already taken a stab by buying in spite of the possible downsides, so I'm off the fence in that respect. My prediction is that it's all going to be a bit less dramatic than people think. Over the next year or so, rates might go up slightly or fall slightly, but not to any massive degree. If house prices do fall that will only be one factor among many. Okay variable rate or fixed rate mortgage? Quote Link to comment Share on other sites More sharing options...
Magpie Posted April 13, 2006 Share Posted April 13, 2006 Okay variable rate or fixed rate mortgage? Fixed, because I would lose more from a 1% rise than I would gain from a 1% fall (meaning simply that I don't have enough leeway in the short-term to leave myself open to too much downside risk). Also because even at the current rate we are below long term averages, so whatever happens this year and next, there is more room for rates to rise than there is for them to fall. Quote Link to comment Share on other sites More sharing options...
karhu Posted April 13, 2006 Share Posted April 13, 2006 (edited) Fixed, because I would lose more from a 1% rise than I would gain from a 1% fall (meaning simply that I don't have enough leeway in the short-term to leave myself open to too much downside risk). Also because even at the current rate we are below long term averages, so whatever happens this year and next, there is more room for rates to rise than there is for them to fall. In that case you're an interest rate Hawk (actions speak louder than words). Good for you, I'd do the same in the current climate. Obviously, I'm not planning to buy at present. Edited April 13, 2006 by karhu Quote Link to comment Share on other sites More sharing options...
Magpie Posted April 13, 2006 Share Posted April 13, 2006 In that case you're an interest rate Hawk (actions speak louder than words). Good for you, I'd do the same in the current climate. Obviously, I'm not planning to buy at present. Well, if I've learned one thing from doing business with variables (like buying and selling in floating currencies) it's to hope for the best but prepare for the worst, so I'm applying that really. And I'm looking at several years, rather than the next move, so over that time frame I think it makes sense to be cautious rather than overoptimistic. Quote Link to comment Share on other sites More sharing options...
karhu Posted April 13, 2006 Share Posted April 13, 2006 Well, if I've learned one thing from doing business with variables (like buying and selling in floating currencies) it's to hope for the best but prepare for the worst, so I'm applying that really. And I'm looking at several years, rather than the next move, so over that time frame I think it makes sense to be cautious rather than overoptimistic. I'm just making a point that it's amazing how many people shout and scream about how interest rates are coming down for sure (even though they're below their neutral value), but when push comes to shove, i.e., when they take on a mortgage they fix (just in case ) - not including you in this BTW. Quote Link to comment Share on other sites More sharing options...
aussieboy Posted April 13, 2006 Share Posted April 13, 2006 (edited) In that case you're an interest rate Hawk (actions speak louder than words). Good for you, I'd do the same in the current climate. Obviously, I'm not planning to buy at present. Not necessarily. He just has a utility curve that places a higher value on losses than it does on gains, which is what he said. Edited April 13, 2006 by aussieboy Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted April 13, 2006 Share Posted April 13, 2006 Probably the most important point that could be added to this thread is that yes the yield curve may have turned a little, but isn't that more an indication of the receding threat of recession? No recession, no HPC. Simple. Quote Link to comment Share on other sites More sharing options...
Magpie Posted April 13, 2006 Share Posted April 13, 2006 Not necessarily. He just has a utility curve that places a higher value on losses than it does on gains, which is what he said. There you go - I was just trying to think of a clever way of saying that, but you've put it far more elegantly than I could have hoped to. Quote Link to comment Share on other sites More sharing options...
Firangi Posted April 13, 2006 Share Posted April 13, 2006 I'm just making a point that it's amazing how many people shout and scream about how interest rates are coming down for sure (even though they're below their neutral value), but when push comes to shove, i.e., when they take on a mortgage they fix (just in case ) - not including you in this BTW. exactl, all my colleagues here who are predicting an interest rate cut in autum have just fixed their mortgages for 2 years. Quote Link to comment Share on other sites More sharing options...
DavidGold Posted April 13, 2006 Share Posted April 13, 2006 They are not necessarily going to go up. At the end of the day we are more interested in mortgage rates than base rates, and mortgage rates at Nationwide have gone up in the past couple of days, and I gather NatWest (and probably others) have done the same after falling since Spring last year. Recently money market rates have been gently rising, and have jumped 0.072% today alone on Bloomberg for 10 year period. If this carries on mortgage rates will be going up again... Quote Link to comment Share on other sites More sharing options...
aussieboy Posted April 13, 2006 Share Posted April 13, 2006 There you go - I was just trying to think of a clever way of saying that, but you've put it far more elegantly than I could have hoped to. That's the nicest thing that anyone has ever said to me! Quote Link to comment Share on other sites More sharing options...
BearishBull Posted April 13, 2006 Share Posted April 13, 2006 Probably the most important point that could be added to this thread is that yes the yield curve may have turned a little, but isn't that more an indication of the receding threat of recession? No recession, no HPC. Simple. But what does that say about where rates were previously? At historically low levels to boost an economy that would otherwise have flagged perhaps. This is exactly what has happened on a global basis. The US cut rates to the bone after the tech bubble blew up in 2001, other central bankers soon followed to stave off what was fast becoming a global credit crunch. In the meantime, Japan seems to be sorting itself out after over a decade of deflation (sparked off incidently by the bursting of a massive asset price bubble, particularly in property). Rates can't be held at such low levels when economies recover without creating severe inflationary pressure. The tightening bias we're seeing now is merely a return to more historically normal levels... Quote Link to comment Share on other sites More sharing options...
Firangi Posted April 13, 2006 Share Posted April 13, 2006 At the end of the day we are more interested in mortgage rates than base rates, and mortgage rates at Nationwide have gone up in the past couple of days, and I gather NatWest (and probably others) have done the same after falling since Spring last year. Recently money market rates have been gently rising, and have jumped 0.072% today alone on Bloomberg for 10 year period. If this carries on mortgage rates will be going up again... Halifax has also increased 3y/5y fixed term mortgage rates by 0.3% in last couple of days Quote Link to comment Share on other sites More sharing options...
88Crash Posted April 13, 2006 Share Posted April 13, 2006 Might cause worldwide misery and devastation, but not to worry, I've got a cheap house... Don't you mean a reasonably priced house? Quote Link to comment Share on other sites More sharing options...
Magpie Posted April 13, 2006 Share Posted April 13, 2006 That's the nicest thing that anyone has ever said to me! Actually there's a degree to which my whole buying decision is based on a similar utility curve analysis. I think prices may well fall, but I believe I should be prepared for all possibilities from say 25% falls to 10% increases over the next few years. Say prices go down by 10% or more - if I wait a few years I end up slightly better off than if I buy now. But it's a matter of degree. Say prices fall by 5% or less, stay stagnant or rise (or if rates go through the roof) - if I buy now I own somewhere. If I wait a few years I face a genuine risk of once again being priced out and having missed my chance. Obviously this comparison works differently for different people and I wouldn't expect everyone else to make the same judgment. But personally I'm prepared to trade off forgoing the possible gains of waiting against the more severe problems that could be caused by waiting. Don't you mean a reasonably priced house? Yeah, well I went a bit over the top in parody... I take your point though. Quote Link to comment Share on other sites More sharing options...
MarkG Posted April 13, 2006 Share Posted April 13, 2006 I believe I should be prepared for all possibilities from say 25% falls to 10% increases over the next few years. The biggest bubble in British history, when prices treble in a few years due to easy credit, and you think the worst that can happen as rates return to normal levels is a 25% fall? Quote Link to comment Share on other sites More sharing options...
bubbleturbo Posted April 13, 2006 Share Posted April 13, 2006 IMN, from time to time you've had some reasonable points of view, Really?? Wake me up when he has his next one and I will take him off my ignore list Quote Link to comment Share on other sites More sharing options...
Magpie Posted April 13, 2006 Share Posted April 13, 2006 (edited) The biggest bubble in British history, when prices treble in a few years due to easy credit, and you think the worst that can happen as rates return to normal levels is a 25% fall? Not the worst, but nor do I think 10% rises are the most that might be possible. You have to make decisions on what you think is the most likely range and given that the last crash was about 18%, and the previous 2 crashes consisted of stagnation in nominal terms I think that range is the most likely area to plan around. Besides which if you read my post, the point is that I need to plan on my personal circumstances. If prices fall by a huge amount, then fine, I paid too much and I'm stuck for a decade or so. I can live with that if need be. I still see that risk in the context of the alternative risk that I may get priced out simply by stagnation and I put a higher personal value on that risk than on the risk of having bought before massive falls. I'm not even talking about the probability of the various outcomes here - just about where each would leave me and what that would mean to me personally. I'm not telling anyone else to copy me. Just trying to explain how it works for me. Edit for typo: "nominal" for "real" Edited April 13, 2006 by Magpie Quote Link to comment Share on other sites More sharing options...
karhu Posted April 13, 2006 Share Posted April 13, 2006 (edited) Probably the most important point that could be added to this thread is that yes the yield curve may have turned a little, but isn't that more an indication of the receding threat of recession? No recession, no HPC. Simple. This guy just talks a load of Jabbarish. I think the most "important" point that you have forgotten is that the world has been awash with cheap money and that is now coming to an end. The free ride is over, now it's payback time. Equities have been disconnected from reality for a long time. Once the cheap money is finished they'll have to be secured on something and that'll be future earning prospects for both homeowners and companies. Edited April 13, 2006 by karhu Quote Link to comment Share on other sites More sharing options...
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