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Homeowners Braced For Rise In Interest Rates...

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Sledgehammer, I read your thing on your sig about realistbears profession, but frankly I find it confusing, what exactly did he lie about?

It seems he doesn't understand how RealistBear investing his own money makes him a private investor and not a professional investor coupled with a rather rigid view of dictionary definitions.

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What bothers me is that it is cheap imports and labour which have allowed this period of stability and low interest rates. Very little to do with our own relative economic performance. Those trends are now reversing as more of the work and wealth moves to the poorer countries. In the same way as inflation and interest rates were held low by globalisation I don't see any reason to assume the reverse will not also be true.

I am still not convinced that our sanguine approach, letting all the industry and money go abroad, is entirely without price. Relying on Johnny foreigner to support us by buying our financial expertise is also suspect. He is a cunning blighter and will no doubt work out how to spend his own money eventually. Although they never worked out how to make a decent biscuit admitedly.

Pip pip.

buying our financial expertise!!!

We'll show the fella how to get massively in debt and not be able to afford a home.

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Much as I would love a rise in interest rates all I can say is 'DREAM ON!'

America is now talking about recession and the end of their interest rate rises.

We're seeing the old 'consumer spending down' messages here in the UK.

We've seen the pound increase against the dollar even though their rates have gone up and ours haven't.

If the yanks drop in the near future, sterling will get even stronger - making imported goods cheaper - meaning inflation down again.

You'll be lucky if you don't get rate reductions before the end of the year.

Which will give this nutty housing market legs for another year or two.

Which will allow BTL investors to buy up more of the housing stock - while you are still priced out.

So you'll be a bit nearer 40 and you still won't have bought your first place.

Oh, and another thing. You need to differentiate between inflation that is caused by higher spending and inflation of commodity prices and utility prices that squeezes people whose wages are not keeping up. Higher interest rates are used to control inflationary pressures caused by higher spending i.e. when the good times are rolling. Higher interest rates are not used just because things like commodity and utility increases are forcing prices up.

Despite the endless government bullsh*t, we are not in good times. More and more people are feeling the pinch of higher council tax, higher tax, petrol, gas, electricity etc. So, rather than dampen spending, higher interest rates at the moment will simply cause more demand problems as people will have even less to spend.

In this situation, normally, the pound is under pressure and higher interest rates are the medicene that must be taken. In the situation we are in now higher interest rates are not needed as the pound is so high against the dollar.

You can forget rises in interest rates.

I think the US are already in a spiral of rising interest rates that they won't be able to get out of. Even if they do go into recession any reduction in IR there would spark a sell off in the US$. They are also dependent on overseas countries propping up their deficits and as IR's in these countries continue to rise they will force higher rates in the US or they won't lend. As simple as that. Bodes well for gold

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I've just come back from a trip to Hong Kong. The newspaper editors were harping on about possible interest rate increases following those of Japan and china. I arrive back to hear of the USA, Pakistan and India rate raises. The European bank (according to The Times) are due for an increase this week.

To imagine in this global market we are going to buck the trend and cut rates is simply.....imaginary. I can see 5% by Christmas with more raises after up to 5.5 to 6% by summer next.

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I've just come back from a trip to Hong Kong. The newspaper editors were harping on about possible interest rate increases following those of Japan and china. I arrive back to hear of the USA, Pakistan and India rate raises. The European bank (according to The Times) are due for an increase this week.

To imagine in this global market we are going to buck the trend and cut rates is simply.....imaginary. I can see 5% by Christmas with more raises after up to 5.5 to 6% by summer next.

Don't forget we had our IR increases during 2004/5, with 7 increases whilst most were still lowering or maintaining their's. In some respect other countries are playing catch up. I think UK will raise to 4.75% and that will be the peak (correcting last year's abberation of a .25% cut). IR's could begin to decrease again in 2007/8.

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Incidentally, Bootle has just been on Bloomberg and his view is that the next move may well be down

That settles it then: if Bootle says rates are going to go down, rates are going up very soon :).

IR's could begin to decrease again in 2007/8.

Not if the Chinese are busy exporting inflation to us. Companies have already done pretty much everything they can to cut margins, there's little to no 'fat' left to absorb further cost increases.

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It seems he doesn't understand how RealistBear investing his own money makes him a private investor and not a professional investor coupled with a rather rigid view of dictionary definitions.

The key word is "living". If you played golf "for a living" how would you describe yourself?

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Don't forget we had our IR increases during 2004/5, with 7 increases whilst most were still lowering or maintaining their's. In some respect other countries are playing catch up. I think UK will raise to 4.75% and that will be the peak (correcting last year's abberation of a .25% cut). IR's could begin to decrease again in 2007/8.

You sound like Ed Balls

That's the line he trotted out the other week in his/Brown's "mini-panic" about inflation

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intersting moves on betfair - in previous months the odds for a raise have lengthened exponetially in the 4 days before the decision. this time they are firming up nicely - definately maybe

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I don't think there is much, if any, demand led inflation. No matter how much people MEW for new cars and holidays etc - most things you buy are subject to the same, ruthless, market competitiveness that now pervades our society. I would say, for example, that the typical conservatory (on which MEW is often spent) is no more expensive than it was 10 years ago.

You can buy a DVD player for ten bob these days. Not so long ago they used to be 10 quid. If they go up a few percent they will still be nowhere near as expensive as they were just a couple of years ago.

Yep, and isn't that how the current CPI is calculated? - mainly high volume, cheap imported electronic goods to push the official figure down, keep IR low and consumer lead borrowing high....

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intersting moves on betfair - in previous months the odds for a raise have lengthened exponetially in the 4 days before the decision. this time they are firming up nicely - definately maybe

Interesting!!! I put a few quid on at 6.5 the day after the last decision ... it then went up to 13.5 before very quickly coming back down again ... was 6.5(ish) this morning but now just 4.1 ... maybe worth a few more quid for a 5 average? :ph34r:

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Interesting!!! I put a few quid on at 6.5 the day after the last decision ... it then went up to 13.5 before very quickly coming back down again ... was 6.5(ish) this morning but now just 4.1 ... maybe worth a few more quid for a 5 average? :ph34r:

You know what, I've got a feeling they may just raise the rates before scumbag Gordon's placemen arrive. If nothing else, the MPC have to do something to justify their miserable little existence.

As for Roger Bootle - Well if anyone takes that muppet seriously after his string of poor predictions then they deserve to lose a lot of money. The twit has no credibility left whatsoever.

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I wonder how he got his job then? Perhaps you would be more suited to do it, with your superior knowledge of economics?

I would be very surprised to see a rise this month..

but I would like to.

we will this year though.,

I would like to see borrowing kept high.. people could borrow less.

More likely to earn their own money then convince themselves that they are in a bizarre world where their homes have done it for them..

(staggering level of stupidity I am sure anyone will agree....)

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Do please enlighten me as to these 7 increases. I can only find 5 of them.

I bet you they go higher than 4.75% before next summer.

You're starting to sound like Bootle - and trust me, that's no compliment.

Yes, apologies, only 5 consecutive rises. Well spotted.

Doesn't change the point at all though, that the MPC demonstrated that they are prepared to tackle inflation (do the conspiracy theorists think GB was asleep at the time?)

I would be very surprised to see a rise this month..

but I would like to.

we will this year though.,

I would like to see borrowing kept high.. people could borrow less.

More likely to earn their own money then convince themselves that they are in a bizarre world where their homes have done it for them..

(staggering level of stupidity I am sure anyone will agree....)

Don't forget, it's not just about you seeing people getting their come-uppance, APOM (you seem to have a thing about people thinking they're wealthier than they should be)

Companies borrow money to invest, and create jobs. High IRs are not "a good thing". If you'd lived through a recession you would know.

You're too obsessed with people flaunting their wealth at you - chill out and ignore them. don't cut off your nose to spite your face.

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I know, and that's why I say rates will be going higher than 4.75%. There's a whole load of backed up inflation that has yet to filter through to the consumer - and then some more.

Ah, so you're not one of the conspiracists who think the MPC are controlled by GB?

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Marina

some of your post makes sense, but not all of it.

I suspect the BOE will hold rates at current levels despite the global trend. The comment you made about recession, however, is not borne out by the facts. Growth in the U.S. is nowhere near zero and the WSJ is reporting that a significant increase has occurred in exports. The dollar has also seen the benefit of significant demand for treasuries with strangely enough a massive influx of money from the middle east and both north and south Korea. I wonder why!!

Frankly, I cant see the point of 'talking down' the dollar, simply because it remains the primary currency for national reserves. Of course, the Euro could continue to strengthen but remember the risks? Little Britain has already decided the EU is a bunch of worthless bureaucrats and that it's not worth switching currency because the whole EU zone is about to collapse... Of course as the Euro strengthens their exports get more costly and growth will get reigned in. It’s rather Ironic to see how strong the pound is given the true state of the economy - debt levels are of course similar to the UK so who would you bet on if you were a banker with a few billion to secure? I am starting to wonder if sterling strength is actually a sign of instability with the Gvt and BOE complicit in ramping it to unsustainable highs. If so where are you call going to harbour savings?

Anyway, I spoke with Al Greenspam the other day and we both agree there will be a gradual deflation in U.S. hot spot housing locations while other areas like Texas and Illinois enjoy the benefit of investors moving in to hype prices in states with lower prices and expanding populations (I'm not talking waistlines!).

Lets all declare our thoughts and then see who is correct in January

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Anyway, I spoke with Al Greenspam the other day and we both agree there will be a gradual deflation in U.S.

You spoke with Al Greenspan? Was it while helping him cross the road?

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Good discussion guys - nice thread, now my take

UK: Ir HOLD this week - Sterling appreciating against $ (don't want it to get too high now - not with$ already overvalued by 30%). At least 50 basis point rise by 2007 though. 25bp by Oct at latest.

US: HOLD but this is only a pause. 3 meetings from now they will raise again and once more by year end.

Like everyone else Central Banks have to pay the bills. Forget Inflation its the level of demand for treasuries which counts and the US are going to come under increasing pressure in this area.

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There is a difference between demand led inflation and price driven inflation. They demand different solutions too. Raising IRs is normally done to take out excessive demand, not to tackle high, external impacts e.g. energy costs.

Firstly I don't think there is any such thing as 'normal' in macroeconomics, despite what they economists may claim. Some seem to think inflation can be adjusted like water coming out of a tap. WRONG. Secondly, inflation is inflation. Regardless of what causes it. The BoE only has one crude mechanism to stop it IRs. They will rise because they have no choice. The UK is part of a global economy. Time will tell...

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Interesting!!! I put a few quid on at 6.5 the day after the last decision ... it then went up to 13.5 before very quickly coming back down again ... was 6.5(ish) this morning but now just 4.1 ... maybe worth a few more quid for a 5 average? :ph34r:

Down to 3.75 this morning! ;)

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  • 315 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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