Accept It - The Force Is Too Great

[Benedict]

Yeah that extra £15 a month will really help - well it will until council tax goes up and the basic rate tax changes take place in April.

After several rate drops even a tiny 100k mortgage would produce an extra £100 or so a month, how much are you expecting council tax to go up?

[Benedict]

Why not thats still a 25% increase (plus dont forget those arrangement fees that are now being charged). I'd say a 25% increase in a households main expense is cause for concern.

As for you comment re SVR. lets look at all those 100% mortgages or self cert of the last few years a large chunk of those arent going to be able to get a nice fixed rate.

Anyway why do you assume that rate cuts are going to be passed onto fixed rate deals - the last one hasn't

It'd take a while for rate cuts to make it into fixed rate deals, a lot of them already have some cuts priced in if you compare them to the trackers on the market so the trend in rates has to change noticeably before banks price in more cuts.

As for people being pushed onto higher rates because they're riskier, banks are probably going to be sensible about it, if they're faced with a choice between forcing a repossession on a property with no equity in a tough / falling market and giving people a rate that's a bit better than they really deserve then they're not going to shoot themselves in the foot. I'd say there might be a few people unable to remortgage elsewhere who get offered deals by their current provider that bump up the capital or have nasty tie ins and rate changes in a few years so they can recoup their risk premium somewhere without forcing sales now.

[Guest The_Oldie]

After several rate drops even a tiny 100k mortgage would produce an extra £100 or so a month, how much are you expecting council tax to go up?

A £100,000 mortgage won't seem so tiny in a few years time .

[lets get it right]

A £100,000 mortgage won't seem so tiny in a few years time .

It will if inflation is allowed to rip as interest rates drop. Gordon will argue that high oil prices are causing global inflation (just like the 1970s) - nothing we can do about it - just go with the flow - our prices will go up but so are everybody's elses ...

Voila! Abracadabra. 100k mortgage seems very tiny.

[babesagainstmachines]

After several rate drops even a tiny 100k mortgage would produce an extra £100 or so a month, how much are you expecting council tax to go up?

This statement totally sums up the bulls argument and why it is utter nonesense.

I don't know what world you live in, but calling £100k of debt tiny is utterly laughable. The only places where you can get a house for £100k, the average wages are sub £20k.

I'm sorry you have been deluded by the debt pushing VI spin machine. One day you'll wake up though.

[Guest The_Oldie]

It will if inflation is allowed to rip as interest rates drop. Gordon will argue that high oil prices are causing global inflation (just like the 1970s) - nothing we can do about it - just go with the flow - our prices will go up but so are everybody's elses ...

Voila! Abracadabra. 100k mortgage seems very tiny.

Oh yes, I nearly forgot, you believe that property prices will continue to rise.

[subsidiser]

Oh yes, I nearly forgot, you believe that property prices will continue to rise.

My guess is he believes that wages will start to rise once inflation takes hold.

[lets get it right]

Oh yes, I nearly forgot, you believe that property prices will continue to rise.

Move over Oscar Wilde.

It is amazing how many people on here seem unable to read and grasp what other people say. It really is an interesting insight into what I begin to realise is some sort of fundamentalism. Your desire for a house price crash is so great you simply ignore what people say and just keep repeating mantras. Anyone who disagrees with you is an idiot who believes house prices can rise forever. I have never said that.

All I have said is:

The government/BOE will lower interest rates as much as they need to to prevent a HPC/Recession

The credit crunch will affect people's ability to borrow - but not to the extent of causing a HPC

2.5 years from an election, Mr Brown will let the inflation genie out of the bottle rather than have a recession.

Your witty riposte that I believe property prices will continue to rise merely demonstrates to me an unwillingness to think about what is actually happening around you and what is likely to happen.

A buffoon that posts on here said the balance of probability is for a crash. He is, in my opinion, wrong. The balance of probability is for things to carry on as they are. The market will not crash. Prices may not rise much, but they won't fall much either.

You are all hanging around hoping for some sort of armageddon scenario where the banks get their come-uppance. In whose interest would that be?

[AteMoose]

My guess is he believes that wages will start to rise once inflation takes hold.

I propose that in addition to Bull/Bear HPC should support Inflationist/Deflationist

[AteMoose]

This statement totally sums up the bulls argument and why it is utter nonesense.

I don't know what world you live in, but calling £100k of debt tiny is utterly laughable. The only places where you can get a house for £100k, the average wages are sub £20k.

I'm sorry you have been deluded by the debt pushing VI spin machine. One day you'll wake up though.

depends on inflation... wages could be 100k per year if we have a crashing pound and rampant inflation. In 2017 100k could be the same as the average Indian gets paid in india, currencies are in flux. How much did the average Briton earn in 1960? It was alot less than 20k per year....

Edited December 7, 2007 by moosetea

[lets get it right]

My guess is he believes that wages will start to rise once inflation takes hold.

Absolutely. Inflation will be presented as a global problem so the fact that we are inflating our way out of debt will be presented as doing no real damage to the UK economy because everyone else is doing it.

I can hear it already ... "In the face of global inflationary pressures, it makes sense to relax the inflation targets for a while, to ensure the UK does not fall into recession."

It's plain what will happen. Not very nice but that seems to be this government for you.

[Benedict]

This statement totally sums up the bulls argument and why it is utter nonesense.

I don't know what world you live in, but calling £100k of debt tiny is utterly laughable. The only places where you can get a house for £100k, the average wages are sub £20k.

I'm sorry you have been deluded by the debt pushing VI spin machine. One day you'll wake up though.

London, with 40+ years to retirement over which timescale a 100k debt does seem like nothing.

Anyway, if you are in a 100k house on a 20k wage then 1% off your mortgage rate is an inflation busting 6.5% pay rise. Even if your salary only tracks cpi you'd still be better off, council tax rises or no.

[Minesapint]

Britannia are offering 5.39% for 5 years with only a 1k arrangement fee, no higher lending charge up to 90% LTV and many of those coming off 2005 fixes will have at least 10% equity by now. Some article on the front page saying the average 2005 2 year fix was 4.8, it's not going to cripple many people going up to 5.39.

It's just not the same as people going from 2% teaser rates to 8% subprime rates, it's a kick in the finances but it's not a death blow to anyone who wasn't already barely able to cope.

Not one for the BTL brigade "If (either of) you will retain a share in another property which currently has a mortgage outstanding, the maximum we will lend is 75%"

Oh and 4.8 to 5.39 is still a 12% increase

[AteMoose]

London, with 40+ years to retirement over which timescale a 100k debt does seem like nothing.

Anyway, if you are in a 100k house on a 20k wage then 1% off your mortgage rate is an inflation busting 6.5% pay rise. Even if your salary only tracks cpi you'd still be better off, council tax rises or no.

it depends what happens to inflation/CPI.....

[Benedict]

Not one for the BTL brigade "If (either of) you will retain a share in another property which currently has a mortgage outstanding, the maximum we will lend is 75%"

Oh and 4.8 to 5.39 is still a 12% increase

I agree the BTL brigade is in trouble, as are the sectors of the market reliant on them.

It's about an 8% increase on a 25 year repayment basis, in line with 2 years of wage inflation at RPI.

[Benedict]

it depends what happens to inflation/CPI.....

If inflation goes mental compared to wage inflation then people are ******ed anyway.

[Guest The_Oldie]

Move over Oscar Wilde.

It is amazing how many people on here seem unable to read and grasp what other people say. It really is an interesting insight into what I begin to realise is some sort of fundamentalism. Your desire for a house price crash is so great you simply ignore what people say and just keep repeating mantras. Anyone who disagrees with you is an idiot who believes house prices can rise forever. I have never said that.

All I have said is:

The government/BOE will lower interest rates as much as they need to to prevent a HPC/Recession

The credit crunch will affect people's ability to borrow - but not to the extent of causing a HPC

2.5 years from an election, Mr Brown will let the inflation genie out of the bottle rather than have a recession.

Your witty riposte that I believe property prices will continue to rise merely demonstrates to me an unwillingness to think about what is actually happening around you and what is likely to happen.

A buffoon that posts on here said the balance of probability is for a crash. He is, in my opinion, wrong. The balance of probability is for things to carry on as they are. The market will not crash. Prices may not rise much, but they won't fall much either.

You are all hanging around hoping for some sort of armageddon scenario where the banks get their come-uppance. In whose interest would that be?

Sorry, I must have misunderstood what you said in your original post...

First the prediction:

Interest rates will be cut today and the housing market will take off again straight after Christmas - exactly as it did in 2006.

Since you now seem to be insisting that this thread is about general inflation rather than house price inflation, I'll move it to the correct forum (Economics).

[dandare500]

Is it PC to be a racistist, i.e. someone who is predjudiced against racists?

Yes of course, if you claim that someone is racist because you think you can see racism when they didn't even notice, or worse, in the name of anti racism you positively favour someone because of their skin. This is clear racism. In a perfect world we wouldn't need to blame blame blame. With the blame breeds perfect people. - Your PC person!

Edit: Read question wrong but there you have it, it looks like we have some common ground, although for me, if the original poster says he didn't notice then yes it is the racistist or whatever you made up who is the t*sser.

Edited December 7, 2007 by dandare500

[subsidiser]

Yes of course, if you claim that someone is racist because you think you can see racism when they didn't even notice, or worse, in the name of anti racism you positively favour someone because of their skin. This is clear racism. In a perfect world we wouldn't need to blame blame blame. With the blame breeds perfect people. - Your PC person!

What the...?

I look away from this thread for a moment and come back to find people are arguing about who's the least racist.

What happened to the house price discussion?

[dandare500]

What the...?

I look away from this thread for a moment and come back to find people are arguing about who's the least racist.

What happened to the house price discussion?

Look back and see Fancy Pants attacking the free use of Avatars. People squabble - sh*t happens -as much life as HPC!

[roadtoruin]

Absolutely. Inflation will be presented as a global problem so the fact that we are inflating our way out of debt will be presented as doing no real damage to the UK economy because everyone else is doing it.

I can hear it already ... "In the face of global inflationary pressures, it makes sense to relax the inflation targets for a while, to ensure the UK does not fall into recession."

It's plain what will happen. Not very nice but that seems to be this government for you.

You seem to have a lot of things that seem to have to happen simultaneously to create your HPI-continues scenario:

High inflation getting us out of debt (NO, early '90's high inflation did not preven continual GC1 proceeding)

IR relaxation will galvanise sentiment (see brackets above)

Continued availability of credit (NO. notwithstanding sentiment, what about the Eric Pebbles syndrome - don't you think those category of borrowers have already or are being choked of from multiple income IO ?)

You also seem to think the politicians will be prepared to shunt us toward hyperinflated armageddon in order to get re-elected. That is just more conspiracy theory and to me totally implausible. You must have an extremely cynical view of the electorate, statistically more people want house prices to fall (in real terms) than to rise, so why is that a vote-winner ?

[Disillusioned]

It reads great. Unfortunately it ignores the fact the market runs on sentiment and when in a rate lowering cycle sentiment progressively becomes more positive.

I was simply explaining that rates will need to be cut a lot more before sentiment changes (back). Contrary to your OP, this cut isn't going to do it. If the BoE continue to reduce rates, as far as 4.75%, let's say, then you may see HPI rekindled - on the condition that all these cuts are passed on to the borrowers by the lenders, without the hidden increases in arrangement fees and so on.

My point is that it needs to go lower than you think, not that I expect you to agree.

{Note to self: very impressed by the lenders who immediately passed on this cuts - and got the positive media attention as a result - whilst simply increasing the arrangement fees.}

Move over Oscar Wilde.

It is amazing how many people on here seem unable to read and grasp what other people say. It really is an interesting insight into what I begin to realise is some sort of fundamentalism. Your desire for a house price crash is so great you simply ignore what people say and just keep repeating mantras. Anyone who disagrees with you is an idiot who believes house prices can rise forever. I have never said that.

All I have said is:

The government/BOE will lower interest rates as much as they need to to prevent a HPC/Recession

The credit crunch will affect people's ability to borrow - but not to the extent of causing a HPC

2.5 years from an election, Mr Brown will let the inflation genie out of the bottle rather than have a recession.

Your witty riposte that I believe property prices will continue to rise merely demonstrates to me an unwillingness to think about what is actually happening around you and what is likely to happen.

A buffoon that posts on here said the balance of probability is for a crash. He is, in my opinion, wrong. The balance of probability is for things to carry on as they are. The market will not crash. Prices may not rise much, but they won't fall much either.

You are all hanging around hoping for some sort of armageddon scenario where the banks get their come-uppance. In whose interest would that be?

As I say above, you're underestimating how far the I/R needs to be lowered to create the sentiment change you're after.

[subsidiser]

You seem to have a lot of things that seem to have to happen simultaneously to create your HPI-continues scenario:

High inflation getting us out of debt (NO, early '90's high inflation did not preven continual GC1 proceeding)

IR relaxation will galvanise sentiment (see brackets above)

Continued availability of credit (NO. notwithstanding sentiment, what about the Eric Pebbles syndrome - don't you think those category of borrowers have already or are being choked of from multiple income IO ?)

You also seem to think the politicians will be prepared to shunt us toward hyperinflated armageddon in order to get re-elected. That is just more conspiracy theory and to me totally implausible. You must have an extremely cynical view of the electorate, statistically more people want house prices to fall (in real terms) than to rise, so why is that a vote-winner ?

I'd like to take you up on that 90's high inflation statement. Have a looky here - Historical interest rates

You'll find that inflation "blipped" up from 1989 reaching a peak in about 1991 and then plummeted.

It plummeted because of very strong (over strong?) anti-inflation policies persued by the government. So there was genuine downward pressure by the Govt. This is not the case at present. Inflation is low, but the policies suggest that inflation is not being held down. But perhaps the govt is learning from the mistakes of the 90's when it was too disinflationary?