Wednesday, July 18, 2007

IRs to 6.5%?

Home loans and fuel prices are set to soar as inflation climbs

"The Bank of England could lift base rates to 6.25 per cent within months after inflation breached its official target once again. Some experts predict that rates could even top 6.5 per cent, piling further misery on borrowers"

Posted by confused76 @ 09:07 AM (1666 views)
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4 thoughts on “IRs to 6.5%?

  • planning4acrash says:

    And the rest, why will nobody predict that rates will peak more than 1% above its current rate? At Christmas a 5.75 or 6% peak was possible, now a 6.5% peak is possible. Could that be because higher preductions would be tantamount to admitting that variable rates are a bad deal at present? Many current variable rates become unviable if rates go above 6%, factor in a rise to 7% and no first time buyer will go for a fix, because property values will go down, whilst lucrative customers on standard variable rates will scramble for fixes that will provide less profit for banks in the long run.

    If nothing changes, expect 7%, more bad news and 8 – 9% within the next 1-2yrs, hell, why shouldn’t interest rates go into double figures like last time? Is it really different now? The fact is that too much money is chasing too many unproductive assets. The free market is not operating efficiently, and, whilst this can happen for a while, it can’t happen forever, because speculation on unproductive assets is ploughing wealth into pretend money, which evaporates once re-priced when their true economic value is recalled. And houses will be re-priced. But where will the hot money go when it leaves houses? We have a global economy now that ravages like a wildfire. Hot money left the .coms a few yrs back, found a new home in houses, is now purging far flung places like NZ, constantly seeking a higher yield, reinforcing itself. We could end up being target for more hot money, maybe we could see a stock market bubble next with more big aquisitions, further fuelling inflation, and, possibly, further inflating the top end of the London house market? This would be financed by foreign money such as the Yen, as seen in New Zealand. Eventually tho, if this isn’t nipped in the bud on a global scale, we could see another global depression within the next ten years. Possibly triggered by $100 or $150 oil, and a recognition that peak oil is upon us, which could re-value corporate risk and consumer activity accross the board and stamp out the forest fire rather abruptly. The problem is, how do we plan for this? How do we plan our retirement, etc. in this climate? Or am I making a mountain out of a molehill?

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  • tyrellcorporation says:

    ‘The report warned that people were ‘burying their heads in the sand’ when it came to debt, with consumers typically owing twice as much on credit cards, loans and overdrafts as they thought they did. While the average person thinks they owe £5,251 in unsecured debt, Bank of England figures show the actual amount is £10,300.’

    Incredible! So the actual UK debt problem is twice as bad as thought… LOL, bring it on!

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  • I can tell you about the past bubble in .dom. A friend of mine in the midlands in 1999 was working as a vb programmer earning £80 per hour. He has a nice house in Leek, he had 2 Mazdas, a Noble, and a Porsche. He now charges £30 per hour, the work is less frequent and all but one Mazda is gone. He is still very comfortable as he anticipated a storm and saved a lot of cash to fall back on. But this bubble bursting only affected techies. This next one will hit millions of people and I doubt they will have cash reserves like my friend, actually most are in debt!

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  • What happened to home owner trouble at 5.5% they were all talking about?

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