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Accept It - The Force Is Too Great


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The rate will be cut today but there will be no 'dead cat bounce' this time. House prices have passed the peak and are on the downhill slope. I predict all index's to be showing a minus in the annual house price figures by July at the latest. At the moment we are seeing monthly figures as a minus but the annual rate is still plus. This situation has no more than 6 months left in it. Mark my words.

Yep and we had reached that point precisely in the latter half of 2005. They cut rates 0.25% and off we went again.

Why no 'dead cat bounce'? The credit markets? The government will do whatever they have to to get the credit markets functioning again. Maybe they could freeze interest rates for mortgage holders for 5 years - like the yanks.

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Guest pioneer31
This is a re-run of 2005. Slowing housing market. Doom and gloom. Rate cut before Christmas. Housing market takes off like rocket in New Year. If you're in a position to buy, might be a good idea to plunge in.

No it isn't

Did we have a bank run in 2005?

A credit crunch

So much negative sentiment in the media? (Even the beeb are surprising me)

petrol and food ramping up?

Nope.

Even people at work are muttering about big drops - as though they are some kind of prophet

Sentiment is not something you can change overnight. We've had months of drip,drip,drip from the media now.

I don't know about you but I'd be scared s**tless to buy property now (assuming anyone would lend me enough money)

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ah, I see we still have a live one... :D

thank god otherwise we would just be agreeing with each other & swapping 'I told you so' stories. ;)

ps - can you explain why the Japanese property market still crashed in the 90's when they dropped IR's to 0% ?

No idea. But then again I don't think the economies have much in common. Also, that was then. This is now. This is the UK. This is New Labour 2.5 years away from an election. This is a government that will do anything to hold on to power and to 'protect their record'.

They are not going to stand by and watch the housing market crash and a recession kick off. They will do anything to stop that.

Like the yanks now. Freezing interest rates for mortgage payers for 5 years - pretty radical eh?

Think Gordenron won't follow suit. He may even trump them.

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Been following the BBC take on this and its slowly moved to expecting a cut as we'd expect. The most interesting bit though is the very last sentence.

"Experts have said that even if a cut was made to rates, most lenders would be unlikely to pass it on in full to mortgage borrowers. "

So unless your on a tracker a cut isnt going to make any difference anyway.

But then if you take into account price increases next year, increased tax for most people due to the basic rate changes, council tax increases expected to average 4.5% (inflation at 2% my @rse) increases in food/petrol that have yet to make much of an impact then even that will make the £20 saved in interest per £100k mortgage irrelevant on a 1/4% cut.

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No it isn't

Did we have a bank run in 2005?

A credit crunch

So much negative sentiment in the media? (Even the beeb are surprising me)

petrol and food ramping up?

Nope.

The patient is close to death. That last adrenalin shot will not revive him.

I very much hope you are right. I'm afraid you are not. One thing I have learned from the last few years is the incredible optimism of people. You couldn't take on a 250k debt for 25 years unless you were incredibly optimistic about the future - your health, the health of the economy, your job prospects etc.

This optimism is like a jack in the box. When there is a smidgeon of good news, it springs out of its box and buys another house with an even bigger mortgage.

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ps - can you explain why the Japanese property market still crashed in the 90's when they dropped IR's to 0% ?

from what im told

japan manipulated and worked with the banks to distort markets!

there where, in reality 2 base rates.

One for Consumers, and the other for Forigners and big business.

Consumers where never offered near 0% interest rates, NOT becuase the banks didnt want to lend to them or becuase it was too risky, but becuase there was no competition and the goverment didnt want average internal consumers to have access to credit that cheap

what that ment was, japan could keep an artificially low currency, becuase they where keeping an artificially low base rate. This had two Advantages for japan

lower the YEN, boost exports. Which is an advantage for them as they export more than they import

The Yen Carry trade, a LOT of money is borrowed in japanise Yen, and invested in other currencies, Japanise banks make a margin on that with very low risk (or so the banks thought)

but as most people say, there is no free lunch!

the problems this created is that, a lower yen ment anything imported into japan got more expensive. So 10 years ago heating your house and keeping your car moving might of cost you 10% of your pay package. Now it is costing the average japanise man say 20% of his pay package

IE they are importing inflation into their system, which is hurting the average consumer.

they went on a large bet that forign exports would keep japans economy strong, the only problem is, the way they tried to increase exports (via currency manipulation) ment that internal consumption would suffer in the future. Which is happening now, with toyota selling all time lows within japan.

so, the difference is. japan polititions, businessmen, and banks all worked together to create 2 base rates, one for the people and one for big business and forigners. The latter was at 0% the former was always much higher!

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Like the yanks now. Freezing interest rates for mortgage payers for 5 years - pretty radical eh?

Its a political "im doing something to help" ploy from the president, They dont have the money to bail out more than a few victims, and thats precisely how many it will be- a few.

The reason- well they are going to introduce criteria, they will need to review and get approved those criteria, then theres the forms to fill in, then theres Government approval- so much prevarication- it will work about as well as the schemes fanfared here for key workers to get on the housing ladder- so few got it to mention

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I may well do. I don't want to watch the first 6 months of 2006 happen all over again - while I am out of the market.

You are doing your best to put the bull case, albeit somewhat hysterically ;) but this is not 2005 and there is not going to be a rerun of the sentiment change that happened back then. The situation is completely different today, for starters there's a credit crunch and interest rate reductions will not alter that.

Any rate reductions today will be seen as a sign of weakness, sterling will be marked down accordingly, and we will be importing more inflation. The stagflation scenario is beginning to look increasingly likely.

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Been following the BBC take on this and its slowly moved to expecting a cut as we'd expect. The most interesting bit though is the very last sentence.

"Experts have said that even if a cut was made to rates, most lenders would be unlikely to pass it on in full to mortgage borrowers. "

So unless your on a tracker a cut isnt going to make any difference anyway.

But then if you take into account price increases next year, increased tax for most people due to the basic rate changes, council tax increases expected to average 4.5% (inflation at 2% my @rse) increases in food/petrol that have yet to make much of an impact then even that will make the £20 saved in interest per £100k mortgage irrelevant on a 1/4% cut.

It's about sentiment, not working out on a calculator exactly what you can afford.

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I very much hope you are right. I'm afraid you are not. One thing I have learned from the last few years is the incredible optimism of people. You couldn't take on a 250k debt for 25 years unless you were incredibly optimistic about the future - your health, the health of the economy, your job prospects etc.

This optimism is like a jack in the box. When there is a smidgeon of good news, it springs out of its box and buys another house with an even bigger mortgage.

Yes, this is precisely where in the classic bubble pattern there is a bull trap (Not a dead cat bounce). people see that the crash is not on, so some pile in only to find the crash hasnt really started yet- hence its a trap for bulls!.

You may be right, its bull trap time, but IMHO the legs have been kicked out from under the market, regardless.

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You are doing your best to put the bull case, albeit somewhat hysterically ;)

Example of hysteria please.

Just because someone offers a viewpoint different from yours does not mean they are being hysterical and it shows the empty nature of your comments if all you can do is characterise mine as hysterical.

Oops! Sorry, that was a bit hysterical!

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:lol:

Example of hysteria please.

Just because someone offers a viewpoint different from yours does not mean they are being hysterical and it shows the empty nature of your comments if all you can do is characterise mine as hysterical.

Oops! Sorry, that was a bit hysterical!

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Guest portwinestain

What about the sentiment of the banks? The lenders might lend but will it be like before? And will they lend as much as they did to the brokers? I can imagine some of them are still dribbling after the 9th of August.

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Yes, this is precisely where in the classic bubble pattern there is a bull trap (Not a dead cat bounce). people see that the crash is not on, so some pile in only to find the crash hasnt really started yet- hence its a trap for bulls!.

You may be right, its bull trap time, but IMHO the legs have been kicked out from under the market, regardless.

Perhaps you are right. My biggest worry is that the longer this goes on - the longer it will go on. Whenever you get a bull market - in anything - there is always a sentiment around that is waiting for a bear market to follow.

But when a bull market hits a plateau - and stays there for years ... well the longer it stays there the less chance there is of a sort of 'reaction led' reverse. We have had very high house prices in this country for 4 to 5 years now. Every year more people buy into it - by moving house and taking on more debt. It's not like a stock market where a massive bull market can reverse overnight.

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By that logic, I already own a Learjet.

You make that comment as though it disproves my assertion that many people simply live beyond their means and top up their mortgages every couple of years to finance their lifestyles.

Just because you don't do it doesn't mean others don't and, more importantly, doesn't mean that the actions of others don't affect the housing market.

Rate drop at 12.00 today. Party continues in New Year.

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Example of hysteria please.

Just because someone offers a viewpoint different from yours does not mean they are being hysterical and it shows the empty nature of your comments if all you can do is characterise mine as hysterical.

Oops! Sorry, that was a bit hysterical!

Very amusing :lol: but perhaps you'd like to address the point about the ongoing credit crunch which several posters have already referred to.

Whether or not there is an interest rate cut today, do you really imagine that the housing market can take off again while the easy availability of cheap credit has dried up?

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Guest pioneer31
It's about sentiment, not working out on a calculator exactly what you can afford.

Precisely

and it's substantially weaker than 12 months ago. So much so, that even our old VI friend (the BBC) is joining in on the parade.

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If they drop the interest rate by .25 or more then; petrol and other fuel goes up, the price of food goes up, the price of many things will go up (including Gold :o ) but i will bet the shirt on my back that the banks will not pass that on to mortgage payers. Interest rates held last month but mortgage payments went up regardless.

They must hold the rate where it is today otherwise the cash strapped home owner will be celebrating a false dawn as other expenses cripple them.

Remember the credit crunch? where is the money going to come from to finance another million mortgages? House prices will fall hard whatever happens to interest rates. Only an idiot would get on the housing horror ride now and first time buyers are few and far between.

The BOE is concerned with inflation, not the housing crisis, why?, because in a couple of years Gordon will be able to say that housing is now affordable for everyone.

The housing market is whey beyond saving now folks. i say Hold.

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What about the sentiment of the banks? The lenders might lend but will it be like before? And will they lend as much as they did to the brokers? I can imagine some of them are still dribbling after the 9th of August.

The banks! They can't wait to get lending again! They just need a sign from the government that they will be bailed out and moral hazard is not an issue.

The government, via their mouthpiece, the BOE will provide the sign at precisely 12.00 today.

This will be followed by a great rejoicing throughout the land.

Christmas - and all the debt it involves - will officially be back on and in January re-mortgaging will be back to business as usual.

Come forward you indebted slimeballs. Bring me your debts and I will increase them. Bring me your greed and I will sate it. Bring me your payslip and I will help myself to a large chunk of it. But, most of all, bring me the deeds to your house and I will put a charge on them.

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Very amusing :lol: but perhaps you'd like to address the point about the ongoing credit crunch which several posters have already referred to.

Whether or not there is an interest rate cut today, do you really imagine that the housing market can take off again while the easy availability of cheap credit has dried up?

My point is that 2.5 years away from an election this government is not going to stand by and watch a credit crunch screw their chances of a 'historic' fourth term. Especially and particularly Mr Brown. So, let loose the dogs of inflation. He will bluff and bluster and manipulate the figures - he'll do whatever is necessary - sack Mervyn King - take over the BOE himself - introduce a wages and incomes policy (ahh, happy memories!) ... all I am saying is the party is not over yet and I would not understimate the measures this bunch of jackals will take to keep things afloat.

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