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Interest Rate Cycle, Peak?

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I think we should have some sort of table with interest rate predictions for the next cycle.

Im going to kick the ball off with 6.25% over the next 18 months or so.

Yes I know this may sound ridiculous but it is based mainly on the longterm relationship between US/UK rates.

Anyone care to chance their arm?

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Higher rates for a very short time is good though!

Depends whether they spike very high and fall back quickly. That is the ideal, as it wipes out as much dead wood as possible and then treturns to a reasonable level all owing us all to buy at a reasonable price and IR.

********** and G E I.

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Is 6.25% high?.

If 6.25% is considered to be high intrest rates, and people are factoring in that as the worst case scenario then there are going to be problems on a grand scale.

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Is 6.25% high?.

If 6.25% is considered to be high intrest rates, and people are factoring in that as the worst case scenario then there are going to be problems on a grand scale.

I agree with you there, over the lst 25 years what is the average rate? I am sure it is around about 7%

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If I really had to say, then I'd say the peak from here is in a range between 4.5% & 5.25%

Reasons?

Because the BOE have no major reason to act yet & as other countries are acting, there is a chance of a worldwide slowdown before the BOE has had a chance to do much about it themselves.

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Couldn't resist this thread .....

If we say over the next 2 years, i think interest rates may rise to 4.75%, but currently my best prediction is for them to stay at 4.5%. 5% is bear fantasy land.

We really are in a different paradigm for the foreseeable future of the next two years. Its taken a lot of thinking for me to come to this conclusion and alot of swimming against the tide on here but that is the unpalatable reality of the situation.

I'm at a meeting of bankers this afternoon, I'll let you know what they think tomorrow......

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I agree with the people predicting unchanged or below 5% Interest Rate. The housing market has become such a monster that GB with his ambitions to become Prime Minster will never let his lackeys at the BOE raise them by much. Average IR would probably bankrupt a large proportion of people that have bought since 2001. Anyone that thinks there is no political intervention in the BOE or that the government doesn't secretly rate high House Prices as the only thing that has really kept them in office is living in cloud cuckoo land.

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I can't see it going much above 5%, the consequences will be horrific. We can thank the BoE for that!

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If you think GB can beat the market you got a lot to learn. They know exactly what will happen but will be powerless to stop it may I repeat "You Can't Beat The Market".

Agreed - GB can probably "block" the market, but not stop or beat it. He's a bit like the boy at the Dyke at the moment. He's got his fingure blocking the hole, but it won't last forever. Soon he'll find he's unable to stop the torrant - then goodness know what'll happen!

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I'd guess at rates no higher than 5% in the next year or so - the inflation data that the BOE uses isn't that strong, and if we're matching the US then most are predicting a pause after 5.5% over there. I think it will be pulled back sharpish if it looks to be doing more harm than good like Aug 05.

If the consensus is 4.75 to 5% what effect do poeple think this will have on House prices? I'd guess that if the current market is based on (stretched) affordability then a .25% rise should stall HPI and another one reduce prices by about 5%. Beyond that just depends on whether the bad news snowballs, or if VI spin can hold it steady again.

People need to be really scared for a proper HPC, and at the moment they aren't scared enough.

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And another thing

Has anyone considered what Mervyn's respone will be to the whingers when rates head towards 6.00%, I have.

Mervyn - "I really do not understand why interest rates moving to 6.00% is such a shock, historically the UK's IR's have averaged exactly that" thankyou and goodnight

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The average rate over past 50 years is 7%, so I'm afraid 9% would be considered a rise, but still not high rates.

Lets hope that Gordon and Tony are not lying when they speak of the miracle economy, because it is a miracle that they will need to get the country through this.

Never in the history of economics has a single country been in the position of holding rates dramatically lower than its Global Peers, and survived.

The UK would have to opt out of the world, become a micro economy, and cease imports and exports for that to be the case.

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I'm thinking that if they don't start moving soon then, it will have an impact on the pound, if that starts sliding dramatically then we will import inflation -which they keep proclaiming is the great evil(probably what they really want then :blink: )- this could precipitate a knee jerk reaction. It depends on the rest of the world(America) continuing to raise rates as they have been, which I imagine they will do.

So I reckon one 0.25 movement up this year in August-Sept which they will try to hold(desperately) into next year; meanwhile the rest of the world will keep raising. There will be lots of talk of gauging the impact of the rate rise...Meanwhile sh!t will hit the fan with fuel costs etc rising further and the pound starting to slide. Lots of reports about cheap sh!t becoming expensive sh!t (wide screen TV's, latest tat becomes unaffordable etc) reinforcing a slow down in the economy.

At which point there will then be a knee jerk reaction and a raising of rates early next year in a couple of 0.5 movements to catch up, they'll probably overshoot world rates to compensate and then a pull back, a whipsaw effect where Gordon and BoE end up with egg on their face and an economy nicely heading into recession (where I'll lose my job and all my savings :) ). I reckon well into 5% (5.75) by the end of next year. :) That's sticking my neck out, and quite frankly a shot in the dark. We'll see.

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the independent recently estimated that the true level of inflation is 4%- not the 2% rubbish that the mpc reports on its doctored inflation measures.

i believe rates will peak between 6% and 7% in 18 months -2years.

if the mpc dont raise to this rate then i think the bond market will recognise the onset of inflation and a depreciating curencey and gilts will rise.

i was of the opinion recently that the mpc would keep rates down on browns instructions.

howver, since the G8 sumit it looks as though central bankers are tightening in tandem

g brown has also recently made some speeches where he is talking tougher on inflation.

i think therefore that he may decide to tackle inalation . i am not convinced, but more hopeful then 3 months ago.

in any event we are going to have a big recession.

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Guest

The most important thing in 2004-5 was

a ) No recession before the election

b ) No recession before the Yanks'

Edited by megaflop

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Never in the history of economics has a single country been in the position of holding rates dramatically lower than its Global Peers, and survived.

The UK would have to opt out of the world, become a micro economy, and cease imports and exports for that to be the case.

Spot on again, the bulls seem to think that holding on to HPI is all that matters, sure you can have it, but if they keep rates like they are will will get high inflation, and money will flee to where rates are higher, I am afraid that unless things change rates are on the up when they will stop I don't know

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  • 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%



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