Thursday, February 8, 2007

Rate rises to cause crash

Markets in a fog over rate rise decision

Last paragraph:Diana Choyleva of Lombard Street Research warned the recent behaviour of the Bank suggested it no longer had full control over the economy. "Not only does this show in excessive growth now - more importantly, the almost inevitable reversal suggests a sharp correction by 2008," she said.

Posted by sold 2 rent 1 @ 08:28 AM (487 views)
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3 thoughts on “Rate rises to cause crash

  • Diana Choyleva, Lombard Street Research, states ” … the recent behaviour of the Bank suggested it no longer had full control over the economy … more importantly, the almost inevitable reversal suggests a sharp correction by 2008.”

    Wow. Has Lombard Street Research, (whoever they are), twigged that Brown’s economic miracle is smoke, mirrors and spin? Could 2008 be, at long, long, last, the “intersting” years which we’ve all been waiting for? I can’t help thinking something will happen to save Brown though – he has, afterall, had the luck of the Devil.

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  • ontheotherhand says:

    Your right it is Wow. Lombard Street Research has always been reliably cheerleading the economy and house prices. Diana seems to have become a shade less bullish about the economy since December when she said;

    “House prices are not overvalued if you look at affordability with interest rates at just 5%,” Diana Choyleva, Lombard Street forecaster, said.
    “Market momentum will be sustained in the near term and a weaker global economy should stop the Bank of England (BoE) raising rates more than a quarter of a percentage point in the spring.
    “We are, therefore, forecasting house price rises of between 10% and 15% in 2007,” she added.

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  • I believe Lombard are the best predictors of the UK housing market

    See link http://www.mortgagesorter.co.uk/house_prices_forecastTO291206.html for the quote

    “2006’s most accurate house price predictions were by Lombard Street Research, who correctly predicted an average increase of around 10 per cent for this year.”

    Lombard were the highest predictors for 2007 (10-15%)
    http://www.bsa.org.uk/feature/2007hp.htm

    They came up with the “housing affordability index” graph that has been discussed on this forum many times.

    This is the graph in October
    http://www.telegraph.co.uk/money/graphics/2006/10/02/cnhouse02big.gif

    The index hit 94.3 in early Jan (before Jan rate rise)
    With HPI still increasing and the Jan rate rise of .25 my guess this figure will be about 92

    I believe the 2008 crash will mirror the crash from 1974 on affordability terms.
    The index needs to hit 80 before prices start tumbling

    Here is the recent history

    August 06

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