Thursday, Oct 05, 2006

UK rates left unchanged at 4.75%

BBC: UK rates left unchanged at 4.75%

UK interest rates have been left unchanged at 4.75% following the Bank of England's latest meeting.
The move was widely expected although borrowers and the markets had been jittery over the prospect of another rate rise.

Posted by devil's advocate @ 12:02 PM (586 views)
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65 Comments

1. paul said...

The current "wait and see" policy at best masks MPC laziness, at worst incompetence.

The MPC members are paid 130k each a year to look forward and anticipate, not wait and see.

Thursday, October 5, 2006 12:11PM Report Comment
 

2. sovietuk said...

Independence, yeah right.

Thursday, October 5, 2006 12:14PM Report Comment
 

3. Marccram said...

phew! lets hope the next inflation report shows inflationary pressure is down so they might not have to raise rates again. Hopefully lower oil prices will help

Thursday, October 5, 2006 12:27PM Report Comment
 

4. Nohpc said...

phew that's good news. Looks like inflationary pressures may be easing a bit with lower oil prices but still looks like another rate rise may be needed.

Thursday, October 5, 2006 12:32PM Report Comment
 

5. Onyerhike said...

Suppose we have to look on the bright side then - they didn't vote to put them down again.


Thursday, October 5, 2006 12:34PM Report Comment
 

6. harold said...

Too bad UT (and others). Well done Paul, oh, and me!

It will be interesting to see what spurious economic nonsense the MPC cite in reference to this latest act of folly. Its not as if the government has mid-term elections coming up, as in the US. But of course, Brown does need things to appear rosy until he finally reaches the top of the greasy pole.

Thursday, October 5, 2006 12:39PM Report Comment
 

7. george monsoon said...

Well, thats that then. I hope the economy goes bust, just after I leave on a flight to india.

Thursday, October 5, 2006 12:47PM Report Comment
 

8. paul said...

Just talking to other homeowner mates.

Even they are questioning the logic. Inflation is above target, housing market is soarding, fuel prices are still rising.

Your homework, gentlemen is to go to your bosses and ask for above-inflation payrises, citing the retail price index and rising fuel costs.

Thursday, October 5, 2006 01:01PM Report Comment
 

9. george monsoon said...

Sorry but I am livid about this. I am not an expert with money matters, but I know common sense when I see it.

This country's economy, along with America and other leading western nations is going to go BANG in the biggest possible way. The goverment must be aware of this, and obviously have no way of stopping it, or are scared to make a move that will accelerate the bust. This is why the MPC have made no move on the interest rate, in the face of overwhelming pressure to raise it. I cannot support my argument with concrete evidence, but I am certain that the majority of the intelligent population has at least a subconcious awareness that "things are not right".

So what do we do? discuss the housing market on here, in a hope that something significant makes the whole market go "POP". This is all well and good for our short term "feel good factor". If we need change, we must take direct action that draws public attention to a situation that is shrouded in VI spin. We need to make everyone aware that the truth is buried under politically biased news publication and fudged government figures. So I say we plan our next move carefully, with a view to drawing as much publicity as possible, in a peacful, but efficient way.

Or we could just shove all our money into debt recovery company shares and wait it out.... ;O)

Thursday, October 5, 2006 01:02PM Report Comment
 

10. J. B. M. C. said...

Excellent news. The housing market is already beginning to cool so no need to increase. A HPC will do nobody any favours.

Thursday, October 5, 2006 01:02PM Report Comment
 

11. Sam said...

nah, I think they're happy with the fact they're not on target as Gordon knows the damage that 5% will do too early before christmas.

I see the ECB has gone for an increase, Looks like we're gonna have a .25 rate hike next month. it will be intresting to see which stoges voted to keep it on hold and who wanted a rise.

Monsoon, how about putting all you money overseas, max out your creditcards then go for an IVA?

Thursday, October 5, 2006 01:21PM Report Comment
 

12. devil's advocate said...

How much does the current inflation have to do with Petrol/Gas? With these both dropping are the BofE not looking at the projected inflation rate for a year in advance. Does anyone know what factors the BofE are citing in relation to the easing of inflation over the coming year. Apart from Oil/Gas and Immigration reducing salary rises.

Thursday, October 5, 2006 01:23PM Report Comment
 

13. C'mon Correction said...

It will be interesting to see how they voted - we've yet to get an idea of Brown's placements. I've lost confidence (long ago) in the BOE and the constant fiddling of figures and spin regarding the economy from Nu Labour.

Is it not possible we'll see inflation drop in Sept/Oct and thus no need for a rate rise in Nov?

No-one seems concerned about the debts the UK public is amassing. Should the MPC take this into account?

Thursday, October 5, 2006 01:24PM Report Comment
 

14. monty said...

Some light reading... http://www.bankofengland.co.uk/monetarypolicy/how.htm

Most interestingly - "And the maximum impact of a change in interest rates on consumer price inflation takes up to about two years." Perhaps this means that the MPC of two years ago should carry the blame for getting inflation wrong? :-)

The way I read this is that the HPI is just one of the many factors to be considered when it comes to setting the rate and it's going to be at least a year before the effects are felt across the board. Methinks the journos paint far too simplistic a picture.

Thursday, October 5, 2006 01:37PM Report Comment
 

15. Indiablue19 said...

Well Lads, good enough. Others are not pausing and scratching their, uh, heads. Let's hope we see sterling go through the floor now.

Thursday, October 5, 2006 01:49PM Report Comment
 

16. indiablue19 said...

Well Lads, good enough. Others are not pausing and scratching their, uh, heads. Let's hope we see sterling go through the floor now.

Thursday, October 5, 2006 01:50PM Report Comment
 

17. indiablue19 said...

Well Lads, good enough. Others are not pausing and scratching their, uh, heads. Let's hope we see sterling go through the floor now.

Thursday, October 5, 2006 01:50PM Report Comment
 

18. Eddie_lomax said...

They are caught between a rock and a hard place, on one hand everything is getting more expensive powered by oil, on the other we cannot afford to make the current debt more expensive. By dithering though they could have just made things more than a months difference in timing worse, as now the Euro has a slightly stronger currency, that should have the effect of making our currency worth even less in this importer's paradise.

With our oil production going down 10% a year and gas even faster we are in for some huge balance of payment headaches, still I guess the MPC know its easier politically to handle a crises then try and pre-empt it.

Thursday, October 5, 2006 02:18PM Report Comment
 

19. Millard said...

A mathematician, an accountant and an MPC member apply for the same job.
The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."
Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."
Then the interviewer calls in the MPC member and poses the same question "What do two plus two equal?" The MPC member gets up, locks the door, closes the shade, sits down next to the interviewer and says "What do you want it to equal?"

Thursday, October 5, 2006 02:49PM Report Comment
 

20. ontheotherhand said...

Those of the MPC who are Brown appointees will obviously want to keep rates low for him. The Bank MPC members know that the hoardes of spin doctors at the Government will blame any house price crash followed by a recession on the BofE raising rates. Like anyone else they have to think of their next job, perhaps on the lecture circuit, and they would rather let the blame rest correctly on Gordon Brown for his never never economy of spending, borrowing and taxing. Therefore they would prefer to risk inflation then risk leaving themselves open to being blamed for a slowdown.

Thursday, October 5, 2006 03:03PM Report Comment
 

21. waitingfor hpc said...

utter madness. I despise this whole govt (of which the boe might as well be part).
No logic in this decision. - AT ALL. Except to win votes and buy time.

Spoke to an estate agent at the weekend she said that average borrowing is now 6x salary for a first time buyer couple!!!!!! SHe thought it was madness but said the Independant mortage advisors were still lending it. Also she said for the first time in 15 years she was getting houses repossesed on her books.

That is why rates are not going up.... sod the country save house prices from collapse !!!! But collapse they will it is only a matter of time.

Thursday, October 5, 2006 03:03PM Report Comment
 

22. waitingfor hpc said...

forgot to mention ...

6x multiple is in Kent - 1 hour from London by train - in London she told me that rises higher - to 10x salaries.
The bubble has gone too far........

Thursday, October 5, 2006 03:04PM Report Comment
 

23. The Capitalist said...

Old Oriental proverb - those that have knowledge do not forecast - those that forecast do not have knowledge

anyone remeber the excellent Water Margin tv series? And this email ferom the daily reckoning:

By Adrian Ash
- If ever we were wrong about gold, how wrong were we on UK house prices!

- Readers taking our advice to sell ahead of the rush in 2003...2004...2005...and again in 2006...would be forgiven for wanting a refund on their subscription to The Daily Reckoning. But remember, this daily dose of free opinion isn't worth a penny more than you've paid for it.

- And if it's serious analysis you want, from a serious analyst, you'd best ask someone else.

- "Look, sterling's going to get the bid right through to 2012," said professional currency trader Tom Tragett to your correspondent on Wednesday. "Long-term, you want to be long of the pound up until the Olympics.
Then...sell the crap out of it."

- The reason for Tom's brusque long-term call? "A house near me in Kent," he went on, "a 4-bed Edwardian semi...nothing special...is on the market for 1.95 million! For 4 bedrooms! This is nuts any way you look at it...and it's just like Japan at the end of the '80s.
The whole country's gone insane. When it blows up...which it will...it's going to be vile."

- Tom Tragett: "But meantime, everyone I'm talking to...at the banks, hedge funds, on the trading desks...makes it property up, sterling up until the Olympics are done. Then the fundamentals will come to the fore and BANG! Sell 'em both. Hard."

- But for now, the madness goes on. House prices rose by 1% last month said the Halifax on Wednesday. The UK's biggest mortgage lender now puts annual property inflation at 8%. "Sound fundamentals [will] continue to support a healthy housing market over the coming months," according to its report. Sound or not, three pillars in the quicksand look set to keep prices upright for now.

- First up, cheap money. The Bank of England just voted to keep interest rates at 4.75%, a level which borrowers and lenders alike seem to love. The money supply rose by 13.7% year-on-year after the Old Ladies hiked rates to that level in August. New lending grew 16% from August last year.

- Second, there's the drop in oil prices. Spared any sharper insights than all other pundits today, your editor notes how oil sank below $60 just as the Dow recorded its new all-time high on Tuesday. Today the FTSE100 has poked its head back above 6,000. Stocks in the UK Real Estate sector have gained 10.9% on average since crude oil peaked out in mid-July. It's like the rise from $30 to $80 per barrel never happened.

- Last but not least, there's the flood of money and people pouring into Britain from abroad. The BBC reckons we've had 1.4 million new immigrants since May 2004.
Ernst & Young say that Britain tops Europe for foreign direct investment. Put them together, and housing in the South and South-East both heavily weighted in the national figures, by the way just keeps getting a bid.

- In the first half of 2006, London got almost as many foreign investment projects as all of France put together. The UK as a whole got 315 projects, 22% of all European deals and more than Germany and France combined. Add this flow to the 6 billion reportedly due in cash prizes to the croupiers of the Square Mile this Christmas, and Britain's on a roll...just like its money.

- "Walk into your bank," Tom Tragett went on, "and you get 2 or 3 juniors jump up and try to sell you a new loan! Already max'ed out? Not a problem just get another credit at low introductory rates! It's madness...a bubble in money. But as a trader you've got to go with it. We're not here to prove the market wrong...not until the bubble bursts at any rate..."

Thursday, October 5, 2006 03:08PM Report Comment
 

24. holding out said...

Sack the lot of them and use the money saved as a down payment on a 1 bedroom shoebox.

Not much of a consolation, but at the moment 15:05 the money markets don't seem too impressed.

http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/currency/11/12/default.stm

Thursday, October 5, 2006 03:11PM Report Comment
 

25. Bfskinner said...

it will be interesting to see how the committee voted and what reasons were given. personally i saw no harm in raising them. Send an early message before christmas, giving the oppertunity to freeze or raise again closer to, or during the christmas spending spree

I wonder if King voted for a raise and whether he was voted down by the 'indepentent' treasury appointees?

BFS

Thursday, October 5, 2006 03:11PM Report Comment
 

26. d'oh said...

To slow down house prices, rates don't need to rise if CPI seriously underestimates true consumer inflation. In fact, this is a nice "invisible" way of slowing things down. Another shot across the bows wouldn't have hurt though.

Of course the "evil d'oh" would like to see rates rise until the pips squeak, but I'm afraid that a serious recesson and threat of deflation will just make the BoE start trying to print this country's way out of trouble as Ben Bernanke has suggested he will do in the US. I don't think this will help of course, just create another asset bubble in gold or similar.

With respect to the US situation, here is a YouTube of Paul Krugman giving his thoughts on the US economy and house bubble:


http://www.youtube.com/watch?v=qo4ExWEAl_k

Thursday, October 5, 2006 04:03PM Report Comment
 

27. Boarder said...

I don't think you understand. Gordon taxes your accumulated wealth, taxes your income and taxes your past assets. But the future was relatively untaxed. Now IF you have interest rates low, and keep stamp-duty high then TA-DA! You can tax peoples future incomes.

Just another source of extortion for Gordo to waste. The U.K. has no future.

Thursday, October 5, 2006 04:06PM Report Comment
 

28. Cstanhope707 said...

Take a look at the little piece of Propoganda at the bottom of this article asking key workers for interviews, suggest you email the beeb like I did asking why do they not interview the average person just trying to get on the property ladder for a change. I had to submit a response to it doubt it will be published though this is what I said.... But if they do interview me hay I might be on TV......

"To be fair I must admit I am not "Privelaged" enough to be a so called "Key Worker" or stupid enough to buy a property at these overvalued and hyped up prices with a group of people. In fact I am just an average person trying to get on the Property Ladder. How about interviewing us for a change but I guess that will not fit into your bias agenda to keep this stupid house price bubble going. Personally I can not wait for it to all come crashing down. On a final point perhaps you would like to ask the "Key Worker" why the Taxpayer should fund that program along with their "Gold plated Civil Service Pensions".."

Thursday, October 5, 2006 05:27PM Report Comment
 

29. bidin'matime said...

D'oh, that's a good link - we need some of that on the Beeb!

Thursday, October 5, 2006 05:28PM Report Comment
 

30. Cstanhope707 said...

Get ready for the "Your House is now worth 200 more every week" headline this weekend in the DE. Bet you they sight "due to expectations of contined lower mortgage rates too as a key driver.....

Thursday, October 5, 2006 05:41PM Report Comment
 

31. nearly30 said...

Very good stuff - cheers for the link d'oh.

Housing Bubble vs. Great Depression was a good vid also - have always thought that we are following Krondratieffs long wave cycles very well - both in terms of the economy and society.

If you subscribe to this idea then we are following what happened at the end of the 'Roaring 20s' (the age of conspicuous consumption).

If you like this kind of thing - check out the following link:

http://www.thelongwaveanalyst.ca/cycle.html

How long time till we get a similar report on Newsnight?

Thursday, October 5, 2006 07:29PM Report Comment
 

32. sirgoogle said...

Bas terds. I hate them so very much.

Thursday, October 5, 2006 10:24PM Report Comment
 

33. sirgoogle said...

I mean the MPC.

Thursday, October 5, 2006 10:24PM Report Comment
 

34. Jackpot06 said...

Nuts whole hazelnuts----what oh what do they think they are trying to achieve?its not as bouyant ,even here in Poole as the collective "they " would have us believe---am still in rented after a year (sold last nov) and viewed a house today (prospective rent for six months) landlady said she had given up trying to sell it .........................what are we as a nation being subjected to? its downright immoral and fraud.................but asking prices are "collectively "sacrosanct and clearly are expected to remain so forever!

Thursday, October 5, 2006 10:58PM Report Comment
 

35. Nohpc said...

You people are crazy. Unless you have a lot of money in savings an increase in interest rates is only detremental to you. By the way having a mortgage that is 5 x your salary is very easy to pay inflation only even taking into account interest rate increases plus you should still have some aside to repay the mortgage. This is what I do. The rent I pay to the bank is half what the rent would be to a landlord if I rented the same flat. This takes into account the 20% deposit I put down on my flat.
Inflation is only 0.5% over target hardly anything to worry about. I don't believe that you people genuinely care about inflation you only want interest rates to go up to serve your own selfish needs and get on the property ladder. Well you should have thought about it years ago and made some money in the process. Stop being jealous and go and get a second job to save for a deposit!

Thursday, October 5, 2006 11:15PM Report Comment
 

36. Rimmer said...

Quote " J. B. M. C. said...
Excellent news. The housing market is already beginning to cool so no need to increase. A HPC will do nobody any favours."

How right you are but a correction to correct values will do my kids and any other sane person a big favour long term, Housing in the UK like the US has to be sustainable or there cannot be a long term economic future at all for the UK ( other than one that does crash ), i hope it is clear that a 25% reduction in house prices is not a crash its the correction to avoid one!

Friday, October 6, 2006 12:17AM Report Comment
 

37. Rayman740 said...

Have to say chaps EVEN the city economists did not expect a rise in IR. I mean we are a bunch of amateurs compared to them. What do we know!!!! THERE WILL BE NO COLLAPSE! MARK MY WORDS!! (this is not a joke)

Friday, October 6, 2006 06:32AM Report Comment
 

38. tyrellcorporation said...

nohpc... I think you've stumbled onto the wrong forum my friend!

I like the bit about us all being crazy though, that made me titter...

Friday, October 6, 2006 08:29AM Report Comment
 

39. waitingfor hpc said...

NOHPC - you best get back in the matrix. Inflation is well over 2.5%. You are another lemming not looking at the facts. How much has you coucil tax gone up? and your energy bills? and your food? and your house price?
Well if they all add up to an average of 2.5% then you are right - if not you are wrong. Also If your target is 2% then 2.5% is 25% over target!!! So I guess in that logic a 25% drop in your flat price will be just fine then and nothing to worry about.

Friday, October 6, 2006 09:04AM Report Comment
 

40. paul said...

nohpc, Britain needs dim folk like you. Carry on. Oh and vote Labour.

Friday, October 6, 2006 09:11AM Report Comment
 

41. george monsoon said...

nohpc

You WILL learn, and learn the hard way. I have no sympathy. They do say Ignorance is bliss, you must be in heaven...!

Friday, October 6, 2006 09:15AM Report Comment
 

42. C'mon Correction said...

Nohpc - a very sweeping statement and a very simplistic view.

Your comment regarding rent is twice what you would pay to a bank is laughable - you've got no clue (i pay over 200 a month LESS than interest only mortgage on my flat, I've actually confirmed this and not just spouting it off the top of my head) and it's dim-wits like you - that think house price inflation is a good thing - have created this unsustainable bubble.

My friend who bought his house 5 years ago has just sold for 30% approx 30k more than he bought, he was dead chuffed and was proudly telling everyone. When i pointed out because of house price inflation the property he has moved into has gone up 65k in that time - so in fact this 'Boom' has caused him to borrow 35k extra for the same thing - his face was a picture and the silence around the table was absolute.

Friday, October 6, 2006 10:12AM Report Comment
 

43. indiablue19 said...

No HPC...
Dear Heart, you are either brave or entirely foolish to make such naive comments in this forum. The question is - what did you PAY for your flat, minus a slim 20% downpayment? Because, all things being as they are, your flat is highly likely to be worth half what it was in short order -- and no bank over government or council is going to care about the fact that you will owe far more than it's value. And if you have an adjustable mortgage you will be in far worse trouble, especially if you are now only meeting costs of what you refer to as "rent to the bank." Don't believe it can't happen, it has happened already in Japan, Australia, and the United States. Equity in property is through the floor and people owe billions in mortgages they are struggling to pay. And these current instances of HPC aren't the first on record -- those of us who have been around longer have already seen this, at various times and places, in decades past! Governments have all promised: never again! Yet here we are.

It is, in fact, just as much for people like YOU that we are all concerned. If this is a selfish discussion, then it is selfish on behalf of the entire nation, in fact the globe, filled with individuals who are only expecting their governments to want and to plan for economic conditions that allow the population to have a roof over their heads, to thrive sufficiently to raise families, and to perpetuate the species within a reasonable quality of life. Many haven't been entitled to that, despite all progress modern society purports to have made and the promises governments make and then regularly ignore. This has nothing to do with dissention and sour grapes. It's called democracy, it's called the mature responsibility of educated adults. And we are all exercising those together. Join us if you will.

Friday, October 6, 2006 10:35AM Report Comment
 

44. devil's advocate said...

nohpc, thanks for your opinion. It is good to see someone challenging the masses on this site. It seems only TalkingRot defends the no crash camp. It is good to have a balanced debate. There's far too much back slapping on this site.

Have to admit that the masses would be better off with a large correction. The people who go into massive debt secured on high property prices will have to just bite the bullet. Why should they be supported at the expense of the rest of the country.

Shame the country getting into such debt will cause growth to fall if a crash occurs but we've lived on credit for too long and the money needs to be paid back sometime.



Friday, October 6, 2006 10:36AM Report Comment
 

45. Sam said...

no hpc. You say you pay half the amount to pay you mortgage than it would cost to rent. While I can believe this. It's most probably because you bought a while before the bubble grew so hanging on to your property makes sense as it gives you a low cost of living. I spend more on socialising than my dad does on his mortgage but he did buy it in 1984, made it through the last 'correction' and come out of it with the house intact.

But that was over two decades and salaries have crept up, to buy now in comparison to buying when you, or my father did, is the difference of being the top and the bottom of a pyramid selling scheme. OK I know the analogy is not perfect, but its similar in that the value added as the product is sold on is not value created. Its value administered to the product and taken away from other areas of the economy. The most obvious example of this is how people pay over inflated prices for houses, then use credit to fund their lifestyles.

However if you bought recently tell someone at the BBC, they'll report your area having the highest price-ratio in the country and soon prices will go up by about 30-40% at least. Then sell, or rent it out yourself at the new increased rate, personally Id sell.

Ive not read anyone, amateur or professional (who is doesnt have vested interests) describe this as anything other than a bubble (and Im always looking for that one sage to enlighten me); unless we are about to break from tradition there will most likely be a price correction how big it is will depend on how and when is manifests. True it may next year, or not until 2010. It may happen in the UK soon, and not in London until after 2012 but happen shall, Id put my house on it.

Friday, October 6, 2006 11:13AM Report Comment
 

46. Rayman740 said...

Hang on a minute, DevilsA, I also think there will be no crash! And i am a chap looking to buy and not sitting pretty. Look at No 42, Indiablue. ((your flat is highly likely to be worth half what it was in short order)). What prey is going to do that? Interest rates at 8 or 9 %. Yes. Certainly. But will that happen? No not at all. No one is predicting more than an IR level at a 5.5-6% peak end 2007. Hardly a crash. A downturn, yes. 10% reduction. But no 50% crash in a short space of time.

Accept it folks that high house prices are here to stay!

Friday, October 6, 2006 11:43AM Report Comment
 

47. holding out said...

DA - Are you a bear in disguise?

A lot of people who are priced out would like to see a crash to so they can get on the ladder. But there are a lot of people who have sold in the last couple of years who want a crash to make a tidy profit. I dare say they are probably thinking of becoming BTLers in a few years time when they hope the market will be depressed.

Friday, October 6, 2006 01:05PM Report Comment
 

48. devil's advocate said...

holding out, theres no disguise. I sold a property in 2003 to move to a new area (Greenwich). The properties were far more expenseive and I was reluctant to get a 200-250k mortage to afford the kind of property that I want, especially of prices crash. I have therefore waited to see what happens, In the meantime the property I sold has risen by 25% (sold in 2005 again).

So whilst I dearly want a crash I appreciate hearing all sides of the story. Not enough debate on this site just lots of back slapping.

p.s. no intention of being a BTL just want a nice home in the area I want to live.

(If things carry on I wont be able to afford the old house I sold)

Friday, October 6, 2006 01:32PM Report Comment
 

49. Rimmer said...

Holding Out

Sorry it might not happen as you expect, by the time unemployment, interest rates and the UK economy has reached the point of correction most people will be reluctant to get on the ladder even if house prices halved, thats the law of supply and demand or rather worry and investment, it may well be the costs of running a home that finally settles things down far more than the cost of buying one.

The outlook for the UK overall does not look good and hasnt for many years, after all what do me make any more?

Friday, October 6, 2006 01:33PM Report Comment
 

50. bidin'matime said...

NoHPC said: "You people are crazy. Unless you have a lot of money in savings an increase in interest rates is only detremental to you."

How do you work that one out, NoHPC? As it happens, I do have a lot of money in savings (from the sale of my house - which produces more in net interest than it costs to rent a house equivalent to the one I sold...) but my sons do not and, unless I am to subsidise them, they will be unable to afford houses at their present prices. They missed the era of cheap housing - are you suggesting they 'should have thought about it years ago' when they were at college?

And as for your mortgage interest being half the rent - I'm afraid I simply dont believe it, unless you are currently in a discounted rate period, in which case watch out - reality is just around the corner!

As George says - you will learn, but sadly the hard way.

Friday, October 6, 2006 01:34PM Report Comment
 

51. bidin'matime said...

DA -your story is a sure sign that this is a bubble - you followed common sense and common sense said prices are too high. It pains all of us who have STR as we see prices continue up, but it's a mugs game now. Some mugs will make profits out of the bubble, but only by selling to bigger mugs - eventually it will all come back to common sense levels.

Friday, October 6, 2006 01:42PM Report Comment
 

52. miniftse said...

NoHPC, I think more of what you say is true rather than not true. I also think you are 'hanging out' on the correct forum. Indeed if we just did our jobs in the first place instead of hanging out on internet forums we may earn more money to put towards a house!! There is occasional debate on the forum, but usually just the same old wise cracks about vested interests, BBC and Crash Gordon.

Friday, October 6, 2006 01:44PM Report Comment
 

53. george monsoon said...

Bidin'

I agree with you, and like your son's, I spent my time in recent years training for a carrer that I thought would earn a decent living for me and my partner, thus I had very little income and no option to buy. I eventually got my qualifications and got a decent payed job. Unfortunately Greed took over the country and now I am completely priced out. Its people like NoHPC that make my blood boil, with their "I'm alright jack" attitude. It does however strengthen my resolve to engineer a crash, and I am spending a lot of time getting up to speed with my knowledge of the money machine, so that I can push a spanner in the works. IT CAN BE DONE by the way with minimum resource for maximum effect. Watch this space.... . .. . ..

By the way, as for helping your sons onto the ladder. - as much as it would make you happy to see them own a home, by subsidising their ownership, you would fuel the housing crisis inadvertantly.

Friday, October 6, 2006 01:53PM Report Comment
 

54. C'mon Correction said...

miniftse - you must have a seriously boring job if every day you look at a forum that discusses opinions that you don't agree with and offers no real debate!

If you KNOW there won't be a crash as you always state, why bother with this site every day ?

you would be better setting up your own site and forum called - www.housepricesalwaysrise.co.uk and see what sort of debate you get - no doubt you could make some decent revenue from estate agents and mortgage advertising !

Friday, October 6, 2006 02:27PM Report Comment
 

55. holding out said...

Bidin - I take DAs point of view. It seems to be a mugs game to buy now. But then it seemed to be a mugs game to buy in 2003 and yet if you had have done and you can sell before the crash (if there is one) you're laughing.

It strikes me there is a lot of people here sitting on money not earning enough interest to keep up with prices at the current rate and probably worrying that prices might go down it real terms (due to inflation) but not in actual terms and this won't be matched by interest rate rises as that will will hit the majority in big debt not the minority sitting here crossing their fingers. Lets face it why wouldn't they hit people with savings they do for everything else.

Friday, October 6, 2006 02:47PM Report Comment
 

56. Devildel said...

i am also sitting on cash and do not see this crash coming..ive spent too much time renting and it could have been 15000 towards my own house...my own independance...and im sure i would have a better life if i did own my own home...

Saying that - im out looking at houses now..might buy, might cry!!

Friday, October 6, 2006 03:53PM Report Comment
 

57. waitingfor hpc said...

easy answer to that - take your money out of 's. I have. Get stocks in gold and other assets and bet to make money. There is better ways to earn money than in a house - and everything is a gamble. Including a house.

Friday, October 6, 2006 04:21PM Report Comment
 

58. Rocket Robbie said...

i sold my house this year thinking a hpc is round the corner but now i am worried i have made a big mistake. Interest rates seem to be the biggest threat to house price crash but even if interest rates reach 5.5% (which seems unlikely) i think people can adjust their budgets accordingly. I hope like most people on this site that prices will plumet but lets face it even if they do we are in for a long wait.

Friday, October 6, 2006 05:41PM Report Comment
 

59. iguana said...

Gold? I think not, sems like another bubble about to burst

Friday, October 6, 2006 06:01PM Report Comment
 

60. bidin'matime said...

George - no plans to part with any of it - will need any profit I make on HPC to supplement my pension fund...

Holding - it would take around 15 years of inflation at current levels, with no HPI, to bring the ratios back to normal levels. I thought they would let inflation nudge up by easing the target of 2%, but the recent rise in rates suggests otherwise. Okay, real inflation is higher than this, but 'headline' inflation forms the basis for many wage negotiations, including public sector, and it's wages that need to rise to improve affordability. So they are stuck for the time being - rock and a hard place - do nothing will be the policy, until the tide of economics washes over them like King Canute...

Friday, October 6, 2006 07:52PM Report Comment
 

61. holding out said...

Bidin - The MPC have raised interest rates by 0.25% (a net effect of 0% over 2 years). But there hasn't been a real crisis. What happens if (when?) the economy goes into meltdown because consumer spending dries up because no one can borrow more money. We're not exactly going to manufacture our way out of it and the city won't generate the wealth in a recession. If stagflation sets in do you still expect the MPC to raise rates?

Waiting - Where do you put your cash if not s - The euro and dollar are hardly safe bets the Yen pays no interest. I tend to agree that gold is a safer bet particularly if the currency hits the rocks.But it is a bit of a pain holding raw gold. So which stocks do you go for ?

Saturday, October 7, 2006 08:15AM Report Comment
 

62. indiablue19 said...

Rayman 740

You can believe it, or not believe it, it's your choice. Those of us who have lived through previous crashes know that houses can fall an extraordinary amount overnight if the market is pushed too far. It's not all tied to interest rates my friend. Suppose, for example, you need to sell? Suppose you find out no one will buy -- unless they can pay half what you did when you bought? Prices can go down, not just up, with demand, and with availability of funding. And the open faucet on mortgages is beginning to close as banks get burned by inappropriate lending.

Ask Japan, as Australia, ask the USA about this crash -- and the last one -- if you don't believe me. Add to that the fact that Life in itself has ups and downs that don't always coincide with the property market fluctuation. People change jobs, get divorced, need a bigger/smaller place, somebody dies and the place has to be sold. And you've got an 80% mortgage like our friend further up the message list. But your property is now only worth -- OK, say 65% of what you paid, because the bubble has burst. And on top of that loss, you've got costs of selling and moving.

And then there are those nasty jumbo adjustable mortgages a lot of people took out thinking times would only improve. Not so very long ago, my friend, it cost 13% interest to buy a house in the US and people were getting nearly 20% interest on savings. It was like living on Mastercard. Not so very long ago, companies in the US were down-sizing and even people with yards of education were packing hamburgers in bags and handing them through drive-through windows. The economy is a very large item and nobody is in control of all of it -- at least nobody your or I knows. And it's always the "little" guy who tried to act too big for his britches who gets squashed -- which is where many of us see this property market going now. The banks and the VIs have their backs covered no matter which way the wind blows. The average citizen has no chance if they VIs decide it's time to raise borrowing rates, kill inflation, or anything else they may get into their heads. Hope that answers your question about "what pray is going to do that." But you want to feel invincible -- well be my guest.

Sunday, October 8, 2006 12:18AM Report Comment
 

63. Nohpc said...

I would like to know how many of the "defintie house price crash" people on this site own a property. I would bet very few. If house prices stay the same as they are now then people will be able to afford them. They are affording them now after all aren't they otherwise the crash would have already happened. I am also very impressed by the everybody's superior intellect and economic knowledge compared to the bank of england. Their only interest is to watch out for their buy to let portfolios (whatever).

Personally I couldn't care less if there is a house price crash. If there is one of 50 percent (which by the way will never happen so keep dreaming). I would be happy to hold onto the property I have and rent it out and buy another much larger property in the meantime in which to live.

You all seem to forget that interest rates were practically doubled overnight during the last crash. That will never happen again. I really don't see the bank changing interest rates by more than 0.25% at a time and given the sensitivity of the econemy to these small changes they are unlikely to go up much more than they are now.

If you can afford a property then I would recommend to buy now but not as a short term investment. It will still be the best long term investment you ever make.

Monday, October 9, 2006 03:00AM Report Comment
 

64. C'mon Correction said...

Nohpc,

There are many many factors other than interest rates that will cause a correction in house prices over the next 10 years. Everyone forgets the last crash took 8 years to materalise, and nothing repeats exactly. Interest rates won't need to even hit 6% before we'll see prices correcting, and it will take many years.

You look at things very simply.

Monday, October 9, 2006 06:02PM Report Comment
 

65. This comment has been removed as it was found to be in breach of our Blog Policies.

 

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