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U S Interest Rate Hiking Frenzy Sends Rates To 3 Month High

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http://www.signonsandiego.com/news/busines...b29bizbrfs.html

February 29, 2008
Rates on 30-year mortgages rose for a third straight week,
hitting the highest level in more than three months
. Freddie Mac said 30-year, fixed-rate mortgages averaged 6.24 percent this week, up from 6.04 percent last week. Rates on 15-year mortgages rose to 5.72 percent from 5.64 percent. Rates on five-year adjustable-rate mortgages rose to 5.43 percent from 5.37 percent. Rates on one-year ARMs climbed to 5.11 percent from 4.98 percent.

This demonstrates that the CBs no longer control the market. As Ben cuts the rates go in the oppostie direction and at a faster pace than ever before. Carry trade opportunities may soon reval themselves making the US$ a place for high returns on deposits.

If Ben cuts to .25% on the Fed rate the US could see 12% plus IR. :o

If Merv begins a series of cuts here we may see our IR soar to levels not seen since the bad old days of the 1990's.

Bottom line: no relief in sight for the property markets as rates begin to soar.

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http://www.signonsandiego.com/news/busines...b29bizbrfs.html
February 29, 2008
Rates on 30-year mortgages rose for a third straight week,
hitting the highest level in more than three months
. Freddie Mac said 30-year, fixed-rate mortgages averaged 6.24 percent this week, up from 6.04 percent last week. Rates on 15-year mortgages rose to 5.72 percent from 5.64 percent. Rates on five-year adjustable-rate mortgages rose to 5.43 percent from 5.37 percent. Rates on one-year ARMs climbed to 5.11 percent from 4.98 percent.

This demonstrates that the CBs no longer control the market. As Ben cuts the rates go in the oppostie direction and at a faster pace than ever before. Carry trade opportunities may soon reval themselves making the US$ a place for high returns on deposits.

If Ben cuts to .25% on the Fed rate the US could see 12% plus IR. :o

If Merv begins a series of cuts here we may see our IR soar to levels not seen since the bad old days of the 1990's.

Bottom line: no relief in sight for the property markets as rates begin to soar.

I imagine with the inflation outlook and the effect cuts would have on the USD, the banks want to see real returns on their money, too.

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RB, the CD cuts are just a cover so the banks can lower savings rates whilst raising lending rates. The CBs are helping the banks refund themselves.

I think that is a very astute and intelligent observation there MT. ;)

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RB, the CD cuts are just a cover so the banks can lower savings rates whilst raising lending rates. The CBs are helping the banks refund themselves.

Almost, but not quite in my view.

By cutting the rates at which banks can borrow from the CB, the CBs are trying to help banks generate more profits to RECAPITALISE themselves.

It is a capital problem the banks have, and capital can only be build by an injection of equity funds (i.e. a rights issue) or by retained profit.

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I think that is a very astute and intelligent observation there MT. ;)

This is true. Unless you want to risk investing in mortgage backed securities which are seeing the soaring IR you are pretty much stuffed. Savings rates are down to around 3.5% on low risk guaranteed short term savings certificates. The only winners here are the banks-----as usual.

The housing markets are to be the sacrifice for the Gordonesque HPI-MEW-BTL miracle follies worldwide.

It all points to deflation IMO. People will be bled dry with soaring IR, poor returns on savings and the end of the miracle ATM machine (houses).

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This is true. Unless you want to risk investing in mortgage backed securities which are seeing the soaring IR you are pretty much stuffed. Savings rates are down to around 3.5% on low risk guaranteed short term savings certificates. The only winners here are the banks-----as usual.

The housing markets are to be the sacrifice for the Gordonesque HPI-MEW-BTL miracle follies worldwide.

It all points to deflation IMO. People will be bled dry with soaring IR, poor returns on savings and the end of the miracle ATM machine (houses).

But the banks have already been burnt, big time. The housing markets are crashing and interest rates rising (for debtors) so the debtors are going to loose out, big time.

We the savers are going to loose out by reduced savings rates. But aren't we all going to spend our savings on houses anyways(when the time is right), so we will still be quids in.

The general consensus on here seems to be that the banks are insolvent so isn't this a small price to pay to stop a total economic catastrophe.

Or am I missing something? :lol::lol:

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Just think the banks should be treating savers a tad better - in my dreams I know, but IMPO everything is being manipulated now just to allow the banks to get their funding levels back up. Prudent people were screwed during the madness bubble days and are being screwed again now.

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But the banks have already been burnt, big time. The housing markets are crashing and interest rates rising (for debtors) so the debtors are going to loose out, big time.

We the savers are going to loose out by reduced savings rates. But aren't we all going to spend our savings on houses anyways(when the time is right), so we will still be quids in.

The general consensus on here seems to be that the banks are insolvent so isn't this a small price to pay to stop a total economic catastrophe.

Or am I missing something? :lol::lol:

Now I've got an idea. Let those of us with a little cash get together and lend it to one of these distressed homeowners ( no BTL'ers) at moderate interest, say a percent or two above what our savings accounts will return, but much cheaper than the banks are asking of the owner. We could come up with a snappy name for it too, how about, a "mutual building society"?

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...

It all points to deflation IMO. People will be bled dry with soaring IR, poor returns on savings and the end of the miracle ATM machine (houses).

They will try capping rates by buying possibly unlimited amounts of bonds of all kinds. It's all explained in Bernanke's writings.

It's interesting to see how slowly he acts. He might get it wrong.

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Now I've got an idea. Let those of us with a little cash get together and lend it to one of these distressed homeowners ( no BTL'ers) at moderate interest, say a percent or two above what our savings accounts will return, but much cheaper than the banks are asking of the owner. We could come up with a snappy name for it too, how about, a "mutual building society"?

I like it. But we could only lend so much before we quickly ran out of money. Unless we could somehow sell on that debt, or get some short term loans off other banks.

This banking larks a piece of p*ss

Edited by OldGreg

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RB, the CD cuts are just a cover so the banks can lower savings rates whilst raising lending rates. The CBs are helping the banks refund themselves.

Central banks can't do this forever, one day the banking system will have to return to an "even keel" ... attract deposits with one hand and lend with the other. Hey didn't they do this some time ago, what was it called ... Frrraactiional ... no try again ... frraaaactiooonalll reesrrrrrrve ... no ...fracctiooonaal rrreseve bonking .... oh b@llox

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Freddie Mac said 30-year, fixed-rate mortgages averaged 6.24 percent this week, up from 6.04 percent last week.

Surely you'd have to be retarded to lend money for thirty years at 6% interest when the world's governments are conspiring to create hyperinflation? Every time governments cut rates, the people of clue should demand more interest to compensate.

Edited by MarkG

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Fannie Mae (largest US mortgage company) is paying $600 for every sale of a new loan to stop people defaulting on mortgage payments. They get $15,000 over 15 years at 5% , first 6 months interest free. Seriously, you must have defaulted on 2 full payments to qualify :lol:

http://www.reuters.com/article/ousiv/idUSN...lBrandChannel=0

They got AAA rating again, as did Freddie Mac for dealing in MBS and offering NINJA and Liar loans, well done this (not at all government controlled organisation which is merely sponsered and allowed to lend with less capital than anyone else) year.

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There is only one way to protect against money printing in an environment of artificially lowered interest rates and that is to get out of the currency concerned. Interestingly (but not as obvious) the same going for making investments in those countries that are doing so - why invest in companies where you take the risk to earn say usually less than 10% when that is being offset by inflation alone. This sort of action over a prolonged period of time can do a lot more damage than just devalue savings.

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If deflation takes hold to really lower saving interest rates, and no other currency or investment for your money inspires confidence, the loss of minimal interest by holding cash may not be that significant compared to the risk of losing capital to default of banks / financial institutions.

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I wonder if the banks will learn there lesson?

No I don't think so either but in another 18 years time we will have other problems being mentioned on this site.

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Almost, but not quite in my view.

By cutting the rates at which banks can borrow from the CB, the CBs are trying to help banks generate more profits to RECAPITALISE themselves.

It is a capital problem the banks have, and capital can only be build by an injection of equity funds (i.e. a rights issue) or by retained profit.

I believe this to be correct.

FED are slashing the short rates whilst allowing the long rates to rise.

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bank defaults - ooh er! Deflation, that is what makes banks go bust!

I'm just saying that in a deflationary environment when there is minimal interest given on liquid cash savings, there is a logic in to keeping actual cash in your own possession rather than in a bank. £10,000 pounds in the banking system can be leveraged at 10:1 or more. £10,000 secreted away under the floorboards is not leveraged at all.

The average yield on three-month Treasury securities in 1933 was an almost invisible 0.515 percent, and briefly even negative. So those who chose to held cash at that time were not denying themselves high-interest income.

-Source: The Great Reckoning (1992 - James Dale Davidson & William Rees-Mogg)

I'm convinced deflation will win out over hyper-inflation - although will still be painful as they are not opposites but the male and female of the same species.

The hints of lower living standards from the BoE are readying us up for the reality of deflation and many painful cutbacks ahead (possibly the fall of the welfare state). Determined reinflation is not a realistic option. The UK has too many financial assets that would be wiped away by hyperinflation for it to be a ready alternative to deflation. Advanced countries have not experienced hyperinflation except in conditions when they were already deranged by defeat in war.

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Now I've got an idea. Let those of us with a little cash get together and lend it to one of these distressed homeowners ( no BTL'ers) at moderate interest, say a percent or two above what our savings accounts will return, but much cheaper than the banks are asking of the owner. We could come up with a snappy name for it too, how about, a "mutual building society"?

Don't do it, present or future legislation might well enable your borrowers to vote to, ah, let's call it 'privatise' this 'society' and make off with all the money.

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  • 297 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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