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Bank Of England Boss Says House Prices At Risk

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Guest wrongmove

Bank of England boss says house prices at risk

"LONDON (Reuters) - The property market could be at risk if a decline in savings from Asian countries pushes up long-term interest rates, Bank of England Governor Mervyn King said in a newspaper interview.

"Savings from Asia are coming into financial markets, bidding down interest rates, and that's bidding up asset prices," King told the Western Mail.

"Now if that process were to go into reverse, and people in Asia started to save less, then I think you would see a rise in long-term real interest rates and that would have an effect on asset prices as a whole."

King said Britain's housing market was not immune to influences from the world economy.

"That's the biggest source of uncertainty, I think," he added in an interview published on Tuesday.

King's comments followed sharp falls in global debt markets last week which lifted long-term bond yields to multi-year highs and sent jitters through riskier asset classes.

Expectations that strong global growth will force central banks to raise interest rates higher than originally anticipated have also driven bond yields higher.

On Monday, King told a business audience in Wales that interest rates may need to rise again if indicators of capacity pressures, pricing intentions and inflation expectations remain elevated.

Money markets show British interest rates -- already the highest in the Group of Seven industrialised countries at 5.5 percent -- are expected to hit 6 percent by the end of the year."

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And, falling house prices would be good news for so many people. So what's the problem?

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Bank of England boss says house prices at risk

"LONDON (Reuters) - The property market could be at risk if a decline in savings from Asian countries pushes up long-term interest rates, Bank of England Governor Mervyn King said in a newspaper interview.

"Savings from Asia are coming into financial markets, bidding down interest rates, and that's bidding up asset prices," King told the Western Mail.

"Now if that process were to go into reverse, and people in Asia started to save less, then I think you would see a rise in long-term real interest rates and that would have an effect on asset prices as a whole."

King said Britain's housing market was not immune to influences from the world economy.

"That's the biggest source of uncertainty, I think," he added in an interview published on Tuesday.

King's comments followed sharp falls in global debt markets last week which lifted long-term bond yields to multi-year highs and sent jitters through riskier asset classes.

Expectations that strong global growth will force central banks to raise interest rates higher than originally anticipated have also driven bond yields higher.

On Monday, King told a business audience in Wales that interest rates may need to rise again if indicators of capacity pressures, pricing intentions and inflation expectations remain elevated.

Money markets show British interest rates -- already the highest in the Group of Seven industrialised countries at 5.5 percent -- are expected to hit 6 percent by the end of the year."

Ah it's Asia's fault. I knew it! :blink:

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And, falling house prices would be good news for so many people. So what's the problem?

It would be good news for some people. It would be very bad news for many more.

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Hey, Say What !!! ????

Do you mean to say that the Bank of England are not independent, that they are driven by the glogal markets ?.

This is not what Gordon and Tony told us, they told us "No more boom to bust" therefore they are in control surely, if it crashes on their watch, it will be their fault and they will fall on their own swords?.

If they are saying that Global Markets are the cause of high rates, and a crash, then why are they criticising the Tories who acted on Global Markets themselves?.

Seems to me, they have screwed the economy, and are now looking for a scapegoat.

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It would be good news for some people. It would be very bad news for many more.

Absolute rubbish,

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It would be good news for some people. It would be very bad news for many more.

No, in the long run it will be good news for them too.

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I get the strange feeling we are being prepared for something!

Funny, I've had that feeling over the last few days as well. The fact that Merv has said people shouldn't stretch themselves (and not within his report) is significant to me!!

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It would be good news for some people. It would be very bad news for many more.

please explain

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The foundations are being laid for the coming hikes in the base rates me thinks?

We are sorry, but the turbulance you have been experiencing is down the the Global wind chill, please fasten your seat belts because we may have to adopt the crash position as the inflation monster just will not go back into the bottle? :(

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merv said some similar things before the last IR drop, the things the BOE says also has an effect on the market/borrows etc etc. If Merv says IRs will rise, he can reduce peoples desire to get into debt and slow money supply, its not all maths....

Irs are going up, but merv is trying to stop them going up too high by scaring the population...

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merv said some similar things before the last IR drop, the things the BOE says also has an effect on the market/borrows etc etc. If Merv says IRs will rise, he can reduce peoples desire to get into debt and slow money supply, its not all maths....

Irs are going up, but merv is trying to stop them going up too high by scaring the population...

Trouble is, the population don't care what Merv has to say. :rolleyes:

They will only care when they start defaulting on that 6x 40year mortgage, which means rates have to rise higher.

I think Merv knows this though.

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Guest grumpy-old-man
Funny, I've had that feeling over the last few days as well. The fact that Merv has said people shouldn't stretch themselves (and not within his report) is significant to me!!

me too.

I can feel it building up in several areas & then it's gonna blow. :D

They have been preparing us for quite a while really, but the media have gone very bearish over the last month or so.

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me too.

I can feel it building up in several areas & then it's gonna blow. :D

They have been preparing us for quite a while really, but the media have gone very bearish over the last month or so.

The strange thing is that the media have gone very bearish all of a sudden on very little real bad news

for housing.

Wait until house prices start to go down, they will be suicidal.

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The strange thing is that the media have gone very bearish all of a sudden on very little real bad news

for housing.

Wait until house prices start to go down, they will be suicidal.

Can anyone think of any reasons why this has happened?

It's the same with the stock markets. There were blips in May last year, Feb this year and the media were all like, this is a buying opportunity, nothing to see. This month though they have been much more bearish. Why? What has changed? Is it really all crowd behaviour/sentiment?

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It would be good news for some people. It would be very bad news for many more.

If people buy a house for a home then what does it matter if prices fall.

It will only be bad news for those that bought a house as an investment, to which I say.. tough, that's the gamble they took.

Edited by Bill

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Guest Cletus VanDamme
Can anyone think of any reasons why this has happened?

It's the same with the stock markets. There were blips in May last year, Feb this year and the media were all like, this is a buying opportunity, nothing to see. This month though they have been much more bearish. Why? What has changed? Is it really all crowd behaviour/sentiment?

Quite simple. The media couldn't be too bearish until they'd all offloaded their BTL portfolios and STRd. They did that earlier in the year, now they've got a vested interest in a crash, and they're going full out on bringing one on now.

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Guest grumpy-old-man
If people buy a house for a home then what does it matter if prices fall.

It will only be bad news for those that bought a house as an investment, to which I say.. tough, that's the gamble they took.

what matters is when IR's go up so much that they can't afford the mortgage for their home, coupled with getting made redundant at the same time.

I have come across so many young people who have 0 or 1 child, yet instist on a 4 bed detached.

a lot people than you think will get affected in this huge crash, basically anyone who has stepped out of their comfort zone with regards to paying the money back. :ph34r:

as for the amateur btl'ers, well they will take their place in history along with the rest of the muppets who have been greedy & borrowed too much. :D

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