Future Interest Rates

[dmrc]

I have noticed a lot of interest for my site from this forum.

Projected Interest Rates:

http://members.cox.net/dmrc/Projected_Rates.htm

Projected Short Term UK Rates:

http://members.cox.net/dmrc/InterestRates/UK_Rates.htm

I figured that I might as well let you all know when I update the data - I did just now.

Let me know if you have any questions.

[Time to raise the rents.]

Come on. Can't you do better than that? This stuff is hardly bear food!

[teddyboy]

Come on. Can't you do better than that? This stuff is hardly bear food!

If you dont think that IR's are an integral part of HPI then your a lot THICKER than I thought TTRTR.

I suspect your in denial and shaitting yourself coz you know they are rising - you just hope its not by much.

TB

DRMC

Thank you for the post - IT IS USEFUL!

[Rachman]

If you dont think that IR's are an integral part of HPI then your a lot THICKER than I thought TTRTR.

I suspect your in denial and shaitting yourself coz you know they are rising - you just hope its not by much.

TB

DRMC

Thank you for the post - IT IS USEFUL!

It's pricing in about 20% rise in IR over next 5 years - if people are battening down the hatches, they can probably swallow that IF they keep their jobs - it's not going to hurt anyone massively apart from those with no slippage factored in their BTL portfolio or have excessive leverage anyway.

[sam]

Come on. Can't you do better than that? This stuff is hardly bear food!

What a very odd thing to say!!!

The man has just posted his findings on how he sees it, in other words the truth.

Maybe your reply gives HPC an insight about you, of someone that exaggerates any kind of Bull story he finds

[BillyShears]

It's pricing in about 20% rise in IR over next 5 years - if people are battening down the hatches, they can probably swallow that IF they keep their jobs - it's not going to hurt anyone massively apart from those with no slippage factored in their BTL portfolio or have excessive leverage anyway.

How many recent BTL "investors" have excessive leverage? I would guess that the percentage is quite high. As in another thread, the more leveraged a BTL "investor" is, the larger the pain caused by even quite small IR rises. And it only takes a small percentage of BTL landlords to go for the exit and a small drop in those entering to tip the market further in the buyer's favour.

Billy Shears

Edited May 8, 2006 by BillyShears

[Time to raise the rents.]

If you dont think that IR's are an integral part of HPI then your a lot THICKER than I thought TTRTR.

I suspect your in denial and shaitting yourself coz you know they are rising - you just hope its not by much.

TB

DRMC

Thank you for the post - IT IS USEFUL!

In fact, I'm laughing all the way to the bank!

With 0.5% predicted, that to me says we aren't far off a peak for the medium term. If you don't agree, consider that the US is doing everything it can to drive itself into recession at the mo, what do you think that will mean to rates further out?

Get back to watching football......

What a very odd thing to say!!!

The man has just posted his findings on how he sees it, in other words the truth.

Maybe your reply gives HPC an insight about you, of someone that exaggerates any kind of Bull story he finds

Give me some credit Sam (the banks have, why not you? ).

150 viewings this post had with no debate. I'm just stiring things up a little. You know, bear bait......

And now wee see they've come out to play.

[tahoma]

I'm just stiring things up a little. You know, bear bait.....

It seems that a thread about IR rises is more like bull bait. And one has been caught - hook, line and sinker.

What would just a .5% rise knock off your bottom line TTRTR?

[look to the past]

Look’s like a load of fictional rubbish to me

How long have they been doing this?

Anyone got any old data from them to see if they got it right before.

[Warwickshire Lad]

150 viewings this post had with no debate. I'm just stiring things up a little. You know, bear bait......

And now wee see they've come out to play.

So, let me get this straight about your life TTRTR.

You've spent many years doing "hard work" to build up a property portfolio and the money that has come along with it - and the very best you can now do with the spare time that all these endeavours has allowed you is coming on this forum to wind people up ?

You really haven't got anything better to do, have you.

[Time to raise the rents.]

So, let me get this straight about your life TTRTR.

You've spent many years doing "hard work" to build up a property portfolio and the money that has come along with it - and the very best you can now do with the spare time that all these endeavours has allowed you is coming on this forum to wind people up ?

You really haven't got anything better to do, have you.

Well I do have time between posts you know!

[ca-uk]

I used to find you annoying TTRTR, but now i'm growing quite fond of you, in a non homosexual way..

A lot of your posts allow me to raise a wry smile - i like your sense of humour..

[Time to raise the rents.]

I used to find you annoying TTRTR, but now i'm growing quite fond of you, in a non homosexual way..

A lot of your posts allow me to raise a wry smile - i like your sense of humour..

Some people take me too seriously. For the most part, I'm chuckling to myself when I post.

[CrashIsUnderWay]

I'll be buying TTRTR's hovels when he goes bust. I'll get them for 40p on the pound.

He's losing money hand over fist, but now is deluding himself that because his rents just about cover his IO mortgages in this time of historically low interest rates, losing 100,000 a week in capital depreciation 'doesnt matter'.

What a plum.

[Time to raise the rents.]

I'll be buying TTRTR's hovels when he goes bust. I'll get them for 40p on the pound.

He's losing money hand over fist, but now is deluding himself that because his rents just about cover his IO mortgages in this time of historically low interest rates, losing 100,000 a week in capital depreciation 'doesnt matter'.

What a plum.

I'd be suprised if you could raise 2p in the pound on my assets.

[Waiting Patiently]

Forget TTRTR's bravado. This will finish off a lot of over-indebted mortgagees and will cause havoc for house prices:

[spline]

Don’t forget that these have to be corrected for risk premium …

The BBA very helpfully publish the corrected figures here:

Link: http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=228&a=1451

  5-May-06GBP	O/N	4.415001W	 4.498332W	 4.500003W	 4.508331M	 4.521672M	 4.531673M	 4.546676M	 4.650009M	 4.748331Y	 4.82667

So possibly a 0.25 point rise 9 months out?

[Rachman]

How many recent BTL "investors" have excessive leverage? I would guess that the percentage is quite high. As in another thread, the more leveraged a BTL "investor" is, the larger the pain caused by even quite small IR rises. And it only takes a small percentage of BTL landlords to go for the exit and a small drop in those entering to tip the market further in the buyer's favour.

Billy Shears

BUT, in areas without chronic oversupply, rents can afford to go up 20% to cover it - it's only the lemmings who bought daft properties (one of 2,000 newbuild idenitkit cheapo exec flats) who will struggle - and TBH, that's their problem - if they are not hysterically stupid, they won't have geared their own home up to 80%, 90% again to fund them, so the worst they will have to absorb is to have to pay mortgage on the MEW to fund the deposit on the BTL - I don't feel sorry for them, it's an investment, sometimes you win, sometimes life kicks you in the balls and runs off with your wife....

[MarkG]

BUT, in areas without chronic oversupply, rents can afford to go up 20% to cover it

BUT:

a) which areas don't have chronic oversupply of rental properties?

which tenants are going to accept a 20% increase in rents, particularly when disposable incomes for the people who do the actual, real work in this country are static or dropping?

Edited May 8, 2006 by MarkG

[Rachman]

BUT:

a) which areas don't have chronic oversupply of rental properties?

which tenants are going to accept a 20% increase in rents, particularly when disposable incomes for the people who do the actual, real work in this country are static or dropping?

A) some of them without row after row of 2 bed flats, let's say proper family homes for rent.

B0 the ones that need a house that's not a 2 bed flat in a modern block in a good area near good schools and jobs. They HAVE to pay. Rents have fallen in both real and relative terms since about 1999 - there is room for them to rise (a house I was getting £1100 a month for in 2000 now has one on the same street that's almost identical for £1000 a month - allow for inflation and there's 20% rise in that just to 2000 levels....

[BillyShears]

BUT, in areas without chronic oversupply, rents can afford to go up 20% to cover it - it's only the lemmings who bought daft properties (one of 2,000 newbuild idenitkit cheapo exec flats) who will struggle - and TBH, that's their problem - if they are not hysterically stupid, they won't have geared their own home up to 80%, 90% again to fund them, so the worst they will have to absorb is to have to pay mortgage on the MEW to fund the deposit on the BTL - I don't feel sorry for them, it's an investment, sometimes you win, sometimes life kicks you in the balls and runs off with your wife....

But are rents going to go up 20% to cover it? If they were going to go up to cover these costs, wouldn't they have already gone up to cover the increased purchase cost of homes?

A) some of them without row after row of 2 bed flats, let's say proper family homes for rent.

B0 the ones that need a house that's not a 2 bed flat in a modern block in a good area near good schools and jobs. They HAVE to pay. Rents have fallen in both real and relative terms since about 1999 - there is room for them to rise (a house I was getting £1100 a month for in 2000 now has one on the same street that's almost identical for £1000 a month - allow for inflation and there's 20% rise in that just to 2000 levels....

But why are rents going to rise? What has changed so that the market forces that have been taking rents down will now reverse and rents will rise? Or do you believe that landlords can just raise rents as they please and the tenants will put up with it in the long term?

Billy Shears

Edited May 8, 2006 by BillyShears

[MarkG]

some of them without row after row of 2 bed flats, let's say proper family homes for rent.

And where would that be, exactly? What part of the country has escaped the infestation of 'investment flats'?

the ones that need a house that's not a 2 bed flat in a modern block in a good area near good schools and jobs. They HAVE to pay.

So very few people, then. And how are those people supposed to find extra money to pay that 20%? If rents are so easy to raise, why haven't landlords raised them _ALREADY_? Why are they throwing away 'free money' by charging artificially low rents?

The simple fact is that most tenants have far more options than most landlords. If they try to raise rents by unacceptable amounts, we move somewhere cheaper... and in most of the country there's a plentiful supply.

[Rachman]

And where would that be, exactly? What part of the country has escaped the infestation of 'investment flats'?

So very few people, then. And how are those people supposed to find extra money to pay that 20%? If rents are so easy to raise, why haven't landlords raised them _ALREADY_? Why are they throwing away 'free money' by charging artificially low rents?

The simple fact is that most tenants have far more options than most landlords. If they try to raise rents by unacceptable amounts, we move somewhere cheaper... and in most of the country there's a plentiful supply.

Plenty of places have 2 bed flats AND houses, people will still have to rent houses and there are fewer of them.

As for rises in rents, same reason, there is a shortage of quality family rentals from what I see. There are two houses less than 400 yards from my house that are in good catchment areas, good commuting, peaceful and private, they are up at over £4,500 a month and always rent out in less than a fortnight (you can see removal vans coming and going on change of tenancy - I have never seen them empty for longer than this). Given they are conservatively worth £800K each, that's a damned good yield if they even get close to £4500 a month...

There's a 1 bed cottage in the same village as my parents - I tried to buy it for £85K in 2003, it rents for £550 a month as soon as it goes up. I should say it's worth £120K every day of the week - that's 5.5% gross.

Landlords are not chucking away money, they are primarily looking at tenants and avoiding a void and covering costs - there is huge oversupply of not perfect houses, at the moment, they have been renting, people will get fussier and therefore there will be greater differentiation in rents between our BTL lemmings and those who actually do it right. I do agree there needs to be a shift from the glut of silly landlords back to O/O in a lot of places, and interest rate rises may squeeze a lot of the fools out - but they will be replaced in good developments as much by proper landlords spotting bargains and able to put up rents as O/O [iMO]

[MarkG]

There are two houses less than 400 yards from my house that are in good catchment areas, good commuting, peaceful and private, they are up at over £4,500 a month and always rent out in less than a fortnight

Yeah, and the situation of people who can afford to pay 54,000 pounds a year in rent is really indicative of the situation of the majority of the population.

Given they are conservatively worth £800K each, that's a damned good yield if they even get close to £4500 a month...

A whole 6.75% before maintenance, voids, etc. Call me excited.

Landlords are not chucking away money

Of course they are, if they could charge 20% more and still get tenants. That's why your argument is obviously nonsense.

[Rachman]

Yeah, and the situation of people who can afford to pay 54,000 pounds a year in rent is really indicative of the situation of the majority of the population.

A whole 6.75% before maintenance, voids, etc. Call me excited.

Of course they are, if they could charge 20% more and still get tenants. That's why your argument is obviously nonsense.

I did not say they were cheap, I said they were good rentals.

Plus 6.75% is a reasonable yield, especially if you financed at 5%ish.

I might not be making myself clear, but I don't believe rental yields for the right properties are that low, I believe that rents for substandard properties in non-perfect locations will stagnate or fall, but that in time, people will pay a premium for the right property in the right place - if THEY have limited supply, then in an inflatory regime for the economy, then the differential between them and the lesser stocks will widen and that could/would mean rent rises there....