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Guest The_Oldie

Property Slowdown Will Not Halt Rate Hikes

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Guest The_Oldie

http://www.dailymail.co.uk/pages/dmstandar...oney.co.uk/news

Even a sharp slowdown in the housing market will not stop the Bank of England from increasing borrowing costs further, leading economists have warned. Despite the pain that four interest rate hikes are already causing borrowers, the UK has such a serious inflation problem the Bank has little choice but to raise them further............

...........The higher cost of borrowing already appears to be taking a toll on property demand. House prices are rising at the slowest pace in four months, and growth is 'subdued' in all regions apart from parts of London, Hometrack said yesterday.

But experts at Citi - the world's largest financial services group --agree that higher interest rates are inevitable.

Economist Michael Saunders reckons the Bank is struggling to keep a grip on inflation because costs are being driven up by overseas factors beyond its control.

http://www.thisismoney.co.uk/mortgages/art...e_id=8&ct=5

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Economist Michael Saunders reckons the Bank is struggling to keep a grip on inflation because costs are being driven up by overseas factors beyond its control.

Or maybe the ****witted decision to do nothing to combat either inflation or HPI over the past couple of years.

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Or maybe the ****witted decision to do nothing to combat either inflation or HPI over the past couple of years.

Too right, in years to come that decision to start the whole thing up again by dropping rates in August 2005 will be seen as a monumental blunder.

You really do get the feeling we're on a roller coaster that is out of control now.

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remit is inflation, not house prices - as long as inflation rises, so will IRs and so will Sterling - house prices can crash as they wish, very much as has happened in the USA

Inflation is indeed the remit.

Will the MPC ignore the fall of house prices as they ignored their rise?

I thought not given Brown's hand-picking of the team, but this suggests they just might do their job properly for once.

Here's hoping.

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A week ago on radio 4, someone representimg the banks said that they will "take whatever action is nesessary inorder to keep inflation under control" (i.e. raising IRs) and at the time they were talking generaly about mortgage costs.

The middle class hard workers of today, who own houses and have MEWd into a life style which they could never have otherwise been able to afford, will be left to rot.

Also, i can see Gordon Brown 'after the crash' saying, "Because of prudent labour party policies, Housing is now at an affordable level for everyone". :o

A couple of points there, but i think borrowing costs will rise for the forseeable future.

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