Jump to content
House Price Crash Forum
Sign in to follow this  
Casual Observer

How Far Do Irs Need To Go

Recommended Posts

Focus of attention here is now clearly on increasing IRs asa the trigger for an HPC, and probably rightly so, since I don't see any other on the horizon.

But how far do you think IRs need to go, bearing in mind they were .25% higher before last August, and that hadn't caused a crash?

How high will they go, and how high do they need to be to achieve an HPC?

Share this post


Link to post
Share on other sites

Focus of attention here is now clearly on increasing IRs asa the trigger for an HPC, and probably rightly so, since I don't see any other on the horizon.

But how far do you think IRs need to go, bearing in mind they were .25% higher before last August, and that hadn't caused a crash?

How high will they go, and how high do they need to be to achieve an HPC?

I think had IR's stayed at 4.75, we would have seen prices start to soften a little bit with some smallish, but not terrible nominal falls. This is why Mervyn voted to hold the rates.

The rate cut and the associated ramping via David Smith et al, has pushed the market even further out of line with fundementals, just when the rest of the world is waking up to over valuations in real estate.

This means UK is now particularly exposed and one increase will totally stall the market once again. When we hit 5%, the bounce gains (from September 05 through to Feb/March 06) will evaporate and start some large monthly falls into the figures, which will affect sentiment and start a slide.

Base rates do not matter that much but they affect sentiment, we have been seeing rising rates on fixed rate mortgagges and other credit. It is a global thing.

Should not have lowered the rates in August 05. IMO, this was very damaging for the longer term strength of the property market.

Share this post


Link to post
Share on other sites

Focus of attention here is now clearly on increasing IRs asa the trigger for an HPC, and probably rightly so, since I don't see any other on the horizon.

I'd be just as worried about rising unemployment and personal insolvencies.

Share this post


Link to post
Share on other sites
Guest Charlie The Tramp

Joe Public having been brainwashed from last August when rates were cut that the only way was now down, any rise in rates even just .25% now will be a physiological shock to their system. I still find people I speak to are blissfully unaware of the dark forces approaching. After the rise in rates to 4.75% in 2004 the HM went completely dead in my local area and only picked up after the cut to 4.50% last year.

Share this post


Link to post
Share on other sites

saw an interesring technical analyisis on bloomberg yesterday.

in summary the view was that gilts are on an upward trend and should hit 7.5%%n 2-3 years time. this will probably result in mortgage rates of > 8%

IMHO this is only balancing out the last few years of very low IRS caused by japans zirp and the fidlling of inflation targets by gordon brown.

i would think that 8% mortgage rates will be a killer for many who have bought property at ludicrous prices in the last couple of years.

Share this post


Link to post
Share on other sites

We've recently had headlines saying that up to a million people are on the verge of bankruptcy. IMHO this must mean that even a small hike is likely to push them over the edge. I'd imagine that behind them there's an even larger number of indebted in some financial distress where a .25% raise will cause pain on top of the extra outgoings on tax and utility bills.

I think sentiment is the big issue. I've heard a few people with large debts say that they think that they'll see a cut in rates to 'help them out', but this seems to be based on nothing but hope. The smallest IR hike, with the promise of more to come may well shock the majority and signal the end of the party. So, a .25% may not do it technically, but the shift in mood might. A further similar hike later in the year, though, would definitely put the screws on it IMPO.

TLM

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.