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othello

Interest Rates Up? Be Happy

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The normally bullish London Evening Standard has a large property supplement each week. THis week there is an article on the first page by city analyst Christopher Fildes saying how good it is for first time buyers that interest rates have gone up.

He says it should be enough to bring house prices back in line 'with past standards'.

He also says the property ladder is more like an escalator. 'While it works it supports the illusion that we can get rich without effort by borrowing money'. When is stops, it jerks and goes backwards, people get thrown off and are crippled.

He ends up saying nothing could be better news for FTBs.

I was really surprised to see such an article in the property section, advertising about two gazillion rabbit hutches from as little as £235,000 (ha ha).

Maybe EAs think it is time to help precipiate a crash - thuss breathing life into a flagging market. Could this be the first in a long line of bearish articles?

Well done ES. ;)

Edited by othello

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He says it should be enough to bring house prices back in line 'with past standards'.

I agree it should help to slow HPI and over a fairly long time they may become more affordable - it's refreshing to see an honest article

However it seems common sense to me that rates need to go beyond 6% and probably closer to 8% to have a dramatic result such as in the previous crash

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I agree it should help to slow HPI and over a fairly long time they may become more affordable - it's refreshing to see an honest article

However it seems common sense to me that rates need to go beyond 6% and probably closer to 8% to have a dramatic result such as in the previous crash

Yeah I agree a 1/4 hear or there won't make much of a difference we need a 2% or more hike.

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Perhaps the editor felt guilty about having published so much positive spin for so long

I think the press are turning with the wind and its blowing from the North with an icy blast that will send prices rapidly South.

The Press like to think they are first with the news and a house price crash will sell a few more papers. The more upscale papers like the FT, DT and Times will want to be seen to have "got it right" as they begin publishing more bearish artciles.

Sentiment has changed and that marks the beginning of the crash phase. IMO, we are in for a white-knuckle ride to the bottom :o *

_____________________

* :lol:

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I agree it should help to slow HPI and over a fairly long time they may become more affordable - it's refreshing to see an honest article

However it seems common sense to me that rates need to go beyond 6% and probably closer to 8% to have a dramatic result such as in the previous crash

Why? I think that's completely wrong. Rates were at 3.5% at their lowest in 2003 and are now 4.75% - that's a 36% increase in the cost of borrowing. Many fixed rate loans in 03/04 will be coming to and end soon and repayments will jump up. When IRs were at 4.75% the market starting foing south and only stopped going negative when IRs were raised - by just 0.25%!!! Now they have gone up again by 0.25% AND are likelty to reach 5% I think we're in for a rocky ride. At 5% mortgage payments will be 43% higher than in 2003. Even that .25% rise added 6% to the cost of borrowing.

We are in a debt-laden economy fuelled by specualtive investment. The chickens are heading home.

Perhaps the editor felt guilty about having published so much positive spin for so long

Pehaps the editor is on holiday. ;)

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Why? I think that's completely wrong. Rates were at 3.5% at their lowest in 2003 and are now 4.75% - that's a 36% increase in the cost of borrowing. Many fixed rate loans in 03/04 will be coming to and end soon and repayments will jump up. When IRs were at 4.75% the market starting foing south and only stopped going negative when IRs were raised - by just 0.25%!!! Now they have gone up again by 0.25% AND are likelty to reach 5% I think we're in for a rocky ride. At 5% mortgage payments will be 43% higher than in 2003. Even that .25% rise added 6% to the cost of borrowing.

We are in a debt-laden economy fuelled by specualtive investment. The chickens are heading home.

I think you mis-calculated - mortgage payments will be more expensive but not by 43%! (that only applies to the interest part not the entire repayments)

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I think a 0.25 increase ont make much difference it may slow down some spending i read somewhere IR may be at 5% by end of year. I think housing activity will be even slower next year dont think we will a crash just prices remaining the same.

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I think a 0.25 increase ont make much difference it may slow down some spending i read somewhere IR may be at 5% by end of year. I think housing activity will be even slower next year dont think we will a crash just prices remaining the same.

It will to new entrants to the market, that house has just cost THAT much more then it did before August 3rd.

This is about sentiment, I honestly beleive that the fact the rates have gone UP is the most important factor here, it's about education, when people are applying for mortgages now, it's knowlonger about how long it will be before my payments go down, but how long will my payments stay at this level before they go UP

Edited by FrozenOut

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I think you mis-calculated - mortgage payments will be more expensive but not by 43%! (that only applies to the interest part not the entire repayments)

Aren't most people on interest-only mortgages? Won't even a small rise have a disproportionately (phew) large effect on those types?

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Aren't most people on interest-only mortgages? Won't even a small rise have a disproportionately (phew) large effect on those types?

Many BTL types will have interest only mortgages

However, most owner occupiers (especially established ones who form the vast majority) should have a repayment mortgage or an I/O mortgage along with a repayment vehicle (investment or endowment) and will have budgeted as though it's a repayment

Also it's probably easier these days to restructure repayments to cope with hikes in IR's

I have not checked the numbers involved yet but will post if I find them

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I agree it should help to slow HPI and over a fairly long time they may become more affordable - it's refreshing to see an honest article

However it seems common sense to me that rates need to go beyond 6% and probably closer to 8% to have a dramatic result such as in the previous crash

8% !!! then we would see a huge crash imo,i hear of so many people just managing at the mo,think this will change towards winter as super huge fuel bills kick in though.8% would be fill ya boots time for cash holders!-lucky cash holders.

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  • 338 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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