kingofnowhere Posted April 28, 2006 Share Posted April 28, 2006 Economics http://business.timesonline.co.uk/article/...2155190,00.html The Times April 28, 2006 Institute calls for immediate interest rate rise By Gabriel Rozenberg, Economics Reporter THE Bank of England was urged yesterday to deliver a nasty surprise to homeowners by putting interest rates up immediately in a pre-emptive strike against inflation. Interest rate-setters were warned that, with growth set to accelerate this year and next, there was a strong risk that inflation would overshoot its target of 2 per cent without action to constrain borrowing. Quote Link to comment Share on other sites More sharing options...
I Told You So Posted April 28, 2006 Share Posted April 28, 2006 Nooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo I Told You So Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted April 28, 2006 Share Posted April 28, 2006 Economics http://business.timesonline.co.uk/article/...2155190,00.html Rather bearish for you KON! Quote Link to comment Share on other sites More sharing options...
karhu Posted April 28, 2006 Share Posted April 28, 2006 Economics http://business.timesonline.co.uk/article/...2155190,00.html The Times April 28, 2006 Institute calls for immediate interest rate rise By Gabriel Rozenberg, Economics Reporter THE Bank of England was urged yesterday to deliver a nasty surprise to homeowners by putting interest rates up immediately in a pre-emptive strike against inflation. Interest rate-setters were warned that, with growth set to accelerate this year and next, there was a strong risk that inflation would overshoot its target of 2 per cent without action to constrain borrowing. Thanks for posting this KoN. I was starting to think you had a vested interest in interest rates going down, when it is highly likely that they are going up very soon. I have (and a lot of people on here) been seeing the manifestations of inflation all around us and new that eventually IRs would need to go up. Even Mervyn made comments about that. They will obviously leave them where they are until the last minute to ensure growth is embedded, but at the end of the day IRs are now on the up. The question to debate is (as we debated last year for the US): How high will they go? Quote Link to comment Share on other sites More sharing options...
kingofnowhere Posted April 28, 2006 Author Share Posted April 28, 2006 Rather bearish for you KON! Why, is there some HPC rule that if you are bullish on property you can't post bearish articles and visa versa. There is some real bearish stuff from time to time, and this obviously has a bearing on the UK housing market. Personally I disagree with the need for a rise, but then IMHO 0.25% here or there isn't going to do much, to the housing market Quote Link to comment Share on other sites More sharing options...
karhu Posted April 28, 2006 Share Posted April 28, 2006 Why, is there some HPC rule that if you are bullish on property you can't post bearish articles and visa versa. There is some real bearish stuff from time to time, and this obviously has a bearing on the UK housing market. Personally I disagree with the need for a rise, but then IMHO 0.25% here or there isn't going to do much, to the housing market I agree with you KoN. I have been bullish on property in the late Nineties, but no more. I used to be a landlord. You would have to be a serious fool right now. However, you seem to misunderstand why we really need an interest rate movement very soon. Rates were dropped to stimulate growth. That is leading to serious inflation - the housing market was part of the problem. Growth is now kicking in, so the BoE have to move from unsuring growth to dealing with inflation. Remember they work on a two-year outlook, not next month!!! Oh and short Sterling contracts today (for the numerate people, like me): SEP 06: 95.230 - 0.010 DEC 06: 95.120 -0.020 The market seems to agree with this Times article. Quote Link to comment Share on other sites More sharing options...
Guest Riser Posted April 28, 2006 Share Posted April 28, 2006 Why, is there some HPC rule that if you are bullish on property you can't post bearish articles and visa versa. There is some real bearish stuff from time to time, and this obviously has a bearing on the UK housing market. Personally I disagree with the need for a rise, but then IMHO 0.25% here or there isn't going to do much, to the housing market The only reason houses are not crashing as we speak is due to the 0.25% cut last August. All the MPC have done through their actions is delay the inevitable and make the correction much harder and faster when it does arrive. Short Sterling rates indicate UK interest rates around 5% ths time next year and those figures are likely to go higher as high fuel prices and the end of the carry trade continue to cause a global increase in rates. Quote Link to comment Share on other sites More sharing options...
Badger Posted April 28, 2006 Share Posted April 28, 2006 Why, is there some HPC rule that if you are bullish on property you can't post bearish articles and visa versa. There is some real bearish stuff from time to time, and this obviously has a bearing on the UK housing market. Personally I disagree with the need for a rise, but then IMHO 0.25% here or there isn't going to do much, to the housing market Not monetarily, but sentiment is king.. Quote Link to comment Share on other sites More sharing options...
kingofnowhere Posted April 28, 2006 Author Share Posted April 28, 2006 I agree with you KoN. I have been bullish on property in the late Nineties, but no more. I used to be a landlord. You would have to be a serious fool right now. However, you seem to misunderstand why we really need an interest rate movement very soon. Rates were dropped to stimulate growth. That is leading to serious inflation - the housing market was part of the problem. Growth is now kicking in, so the BoE have to move from unsuring growth to dealing with inflation. Remember they work on a two-year outlook, not next month!!! Oh and short Sterling contracts today (for the numerate people, like me): SEP 06: 95.230 - 0.010 DEC 06: 95.120 -0.020 The market seems to agree with this Times article. Why would you be a serious fool to be bullish right now? If the economy is going to pick up, then even more people will be employed, which will mean more money chasing a relatively static housing stock. I agree with the two year outlook, but then no one is predicting (Ignoring people here of course), inflation to take off. We may well have the next move up, but against a benign economic enviroment, we are not going to have any house price crash. To get a crash, you need a large upward movement in a short space of time. Over longer periods people can adjust their finances. A 0.25% rise or two is not going to cause the vast majority of homeowners any problems, so you wont get any forced sellers. Quote Link to comment Share on other sites More sharing options...
Lou G Posted April 28, 2006 Share Posted April 28, 2006 The only reason houses are not crashing as we speak is due to the 0.25% cut last August. All the MPC have done through their actions is delay the inevitable and make the correction much harder and faster when it does arrive. Short Sterling rates indicate UK interest rates around 5% ths time next year and those figures are likely to go higher as high fuel prices and the end of the carry trade continue to cause a global increase in rates. As soon as the rate cut happend last August my sister went out a bought a BTL. ! It did change sentiment, jo public though rates were on their way down and there would be another boom! Quote Link to comment Share on other sites More sharing options...
karhu Posted April 28, 2006 Share Posted April 28, 2006 (edited) To get a crash, you need a large upward movement in a short space of time. Over longer periods people can adjust their finances. A 0.25% rise or two is not going to cause the vast majority of homeowners any problems, so you wont get any forced sellers. Yea, but it is going to put stretched buyers off and squeeze BTL yields. Therefore, property stocks will continue to rise from already high values. Large supply with little demand = ?? (Answers on a postcard). Why would you be a serious fool to be bullish right now? If the economy is going to pick up, then even more people will be employed, which will mean more money chasing a relatively static housing stock. You're also confusing economic growth with cheap borrowing. This housing boom (far outstripping GDP growth!!) has been caused by cheap borrowing (essentially free money!!), why on Earth wouldn't it have happened? The cheap money is coming to an end so housing fundamentals will change from being seen as a speculative investment to a roof over your head (quite a difference in valuation, I may add!). All that will be left after the tightening occurs will be rampant inflation as the liquidity seeps into every part of our economy. If you want to use economic growth as the fundamentals for house price increases then they should be valued about 40-50% below the asking prices seen today. Edited April 28, 2006 by karhu Quote Link to comment Share on other sites More sharing options...
kingofnowhere Posted April 28, 2006 Author Share Posted April 28, 2006 Yea, but it is going to put stretched buyers off and squeeze BTL yields. Therefore, property stocks will continue to rise from already high values. Large supply with little demand = ?? (Answers on a postscard). Indeed it will, but nothing like enough to cause enogh forced sellers to swamp the market, And without that house prices are very very sticky downwards, you can see this all the time, people leave their house on the market for 2 years at the same price, or even just take it off. Stock levels aren't high at the moment. Here is the historical levels, and as you can see they aren't out of the norm at 73 (current number) and way below the levels in the Mid 90's when there were many distressed sellers. IMHO probably about 1/3 of the market was distressed sellers then Quote Link to comment Share on other sites More sharing options...
karhu Posted April 28, 2006 Share Posted April 28, 2006 Indeed it will, but nothing like enough to cause enogh forced sellers to swamp the market, And without that house prices are very very sticky downwards, you can see this all the time, people leave their house on the market for 2 years at the same price, or even just take it off. Stock levels aren't high at the moment. Here is the historical levels, and as you can see they aren't out of the norm at 73 (current number) and way below the levels in the Mid 90's when there were many distressed sellers. IMHO probably about 1/3 of the market was distressed sellers then That's not really fair. We have to remember that things were horrific in the housing market up until about 1999. I know I owned several properties and you struggled to find a good offer until about 2002. Quote Link to comment Share on other sites More sharing options...
Levy process Posted April 28, 2006 Share Posted April 28, 2006 I recommend TTRTR gives it a read. It will help him prepare for the future. Quote Link to comment Share on other sites More sharing options...
karhu Posted April 28, 2006 Share Posted April 28, 2006 I recommend TTRTR gives it a read. It will help him prepare for the future. Oh yea he's read it. He's watching the interest rate situation VERY CLOSELY indeed. On the forum he's coming with his usual bullish propaganda. In real life, however, I think the guy is actually getting nervous ..... Trouble is, the other 100,000 landlords in London are also reading this news and are starting to rush for the exit. Will TTRTR be left behind??? Quote Link to comment Share on other sites More sharing options...
munimula Posted April 28, 2006 Share Posted April 28, 2006 (edited) Economics http://business.timesonline.co.uk/article/...2155190,00.html The Times April 28, 2006 Institute calls for immediate interest rate rise By Gabriel Rozenberg, Economics Reporter THE Bank of England was urged yesterday to deliver a nasty surprise to homeowners by putting interest rates up immediately in a pre-emptive strike against inflation. Interest rate-setters were warned that, with growth set to accelerate this year and next, there was a strong risk that inflation would overshoot its target of 2 per cent without action to constrain borrowing. But just like a year ago when it looked like a lot of inflationnary pressures were building up the short term forecasts for inflation by the BoE were all wrong and inflation went to 2.4% but all this time the BoE conveniently kept the 2 year forecast for inflation below 2%. They can easily make predictions like a slowing economy on the back of a slowing housing market to keep these inflation predictions below 2% Whilst GB has his eyes on No. 10 do not expect the BoE to act independently. Last year - short term inflation 2.4%, oil prices up threefold - what did the BoE do? Yep they cut rates. It's almost the same now except for some global changes but the £ is currently gaining against the $ so the argument that US rates going up will force our rates up has been proven complete nonsens Edited April 28, 2006 by munimula Quote Link to comment Share on other sites More sharing options...
ETOPS773 Posted April 28, 2006 Share Posted April 28, 2006 Naw, TTRTR is a Guru isn't he so where he leads the others follow Quote Link to comment Share on other sites More sharing options...
Catch22 Posted April 28, 2006 Share Posted April 28, 2006 The UK economy is dominated by consumer spending on imported goods, in the long term it's a failed model. But worse than that it is hamstrung by the publics belief, owning houses is better than working for a living. Sooner or later the public have to be shocked out of this stupor . Because it destroys the BOE's ability to set rates needed to accomodate industry needs, without it inflating the cost of housing. Trouble is the medication needed, will deliver unpalatable side effects for alot of the patients. OK nobody wants the medication to be administered on their watch, but it will have to be swallowed sooner or later. Quote Link to comment Share on other sites More sharing options...
Bear Goggles Posted April 28, 2006 Share Posted April 28, 2006 Personally I disagree with the need for a rise, but then IMHO 0.25% here or there isn't going to do much, to the housing market Hi KoN, I find it interesting how the stats seem to run in the face of common sense. You post lots of stats showing that the housing market is healthy, and I have no reason to dispute them as I have no great level of expertise in that area. But when I (metaphorically) look out of my window, I see a generation of under 30s working their socks off without any hope of buying a house, everyone I speak to thinks inflation is higher than 2%, people are putting off having children because they don't feel secure in rented accomadation, the anger this situation causes is plain to see in the more emotional posts on this website, and I experience it every day when talking to young people. The ability of the official figures show everying is hunky-dory seems to me to symbolise the disconnection between the reality of people's experience and the rhetoric of the political class. No wonder no one under 30 votes. Quote Link to comment Share on other sites More sharing options...
Casual Observer Posted April 28, 2006 Share Posted April 28, 2006 (edited) Not monetarily, but sentiment is king.. Exactly. The reason why last August's cut gave an exagerrated boost to HPs is that people see .25% movements as the beginning of a new trend, whether it be upward or downward. The fact that it's only .25% is irrelevant. If they do raise rates, I think it will be a long time before they fall again - the MPC won't want to look foolish by changing direction too frequently. My bet is still on stable rates until at least August, and then the beginning of modest rises. Edited April 28, 2006 by Casual Observer Quote Link to comment Share on other sites More sharing options...
munimula Posted April 28, 2006 Share Posted April 28, 2006 The UK economy is dominated by consumer spending on imported goods, in the long term it's a failed model. But worse than that it is hamstrung by the publics belief, owning houses is better than working for a living. Sooner or later the public have to be shocked out of this stupor . Because it destroys the BOE's ability to set rates needed to accomodate industry needs, without it inflating the cost of housing. Trouble is the medication needed, will deliver unpalatable side effects for alot of the patients. OK nobody wants the medication to be administered on their watch, but it will have to be swallowed sooner or later. Well summed up Quote Link to comment Share on other sites More sharing options...
SCUMBAG Posted April 28, 2006 Share Posted April 28, 2006 Naw, TTRTR is a Guru isn't he so where he leads the others follow I like your avatar. Please post more often. Quote Link to comment Share on other sites More sharing options...
OnlyMe Posted April 28, 2006 Share Posted April 28, 2006 If they do raise rates, I think it will be a long time before they fall again - the MPC won't want to look foolish by changing direction too frequently. Hahaha, bit late for that. £100bn's later their creditbility in fighting speculative money is around zero. Quote Link to comment Share on other sites More sharing options...
sam Posted April 28, 2006 Share Posted April 28, 2006 Economics http://business.timesonline.co.uk/article/...2155190,00.html The Times April 28, 2006 Institute calls for immediate interest rate rise By Gabriel Rozenberg, Economics Reporter THE Bank of England was urged yesterday to deliver a nasty surprise to homeowners by putting interest rates up immediately in a pre-emptive strike against inflation. Interest rate-setters were warned that, with growth set to accelerate this year and next, there was a strong risk that inflation would overshoot its target of 2 per cent without action to constrain borrowing. Is it really King posting this article Sam Quote Link to comment Share on other sites More sharing options...
oracle Posted April 28, 2006 Share Posted April 28, 2006 Why would you be a serious fool to be bullish right now? If the economy is going to pick up, then even more people will be employed, which will mean more money chasing a relatively static housing stock. ....erm,nope.your logic is flawed!!! how many dixons sales reps do you need to extract a few more barrels of oil off the coast of russia?? ...not many I suspect. ...most of the work to do that will go to low cost russian workers.....hence the global rebalancing. we've had it good for 15 years,now it's the rest of the world's turn to get rich(a most of the US/UK workers expense) Quote Link to comment Share on other sites More sharing options...
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