Thursday, September 27, 2007

Keep the boom going at all costs! Slash rates! Quick!

UK 'may need to cut rates' - OECD

The UK may need to cut interest rates to boost its economy, the Organisation for Economic Cooperation Development (OECD) has warned.

Posted by david20040_0 @ 07:33 PM (1507 views)
Please complete the required fields.



23 thoughts on “Keep the boom going at all costs! Slash rates! Quick!

  • getting into the final few moves.

    It might be worth actually looking at the board just to see it all finally played out to the last move.

    Reply
    Please complete the required fields.



  • If rates are cut this will support a house price resurgence.

    Reply
    Please complete the required fields.



  • Surely this article is based upon a fundamental error: rate cuts = cheaper mortgages.

    It is far from certain that cutting rates now help mortgage payers at all because the banks have lost their appetite for toxic loans.

    Reply
    Please complete the required fields.



  • David20040…Just as it has in Japan for teh last 10 years

    Reply
    Please complete the required fields.



  • David,
    I am sure the Government will manipulate an IR cut but I am not sure that it will cause a resurgence of HPI. The previous bull run was a combination of low IR’s and unrestricted lending (mainly the latter). At the moment, banks are being conservative with lending so lower IR’s per se will be unlikely to stoke the fire. It may delay any crash however by offering a temporary reprieve to the indebted.

    Reply
    Please complete the required fields.



  • The country needs propping up with more debt urgently or the consumer/retail sector will keel over. But what about inflation and the value of the pound, doesn’t add up to me, then again it probably doesn’t for anyone else with an ounce of sense other than the tabloid fodder.

    Reply
    Please complete the required fields.



  • Don’t worry houseprices are going to come down, maybe not as much as they should, though. If interest rates are cut then the Pound is a gonner. I suspect BoE might cut rates actually, following the US example. This means the pound will keep crashing and falls in house prices may be buffered, but it cannot stop the inevitable downward spiral for houseprices. The key thing is that sentiment amongst the general public has changed. People who have been telling me ‘you better buy a house, prices always go up etc’, are now telling me that houseprices are going to come down!! I’ve also overheard people saying they are selling up before the crash. Within the last two weeks loads of ‘For Sale’ signs have been going up in my town. I feel the best thing to do in the current climate is to buy a bit of gold to hedge your bets against Sterling going pear shaped and inflation (which will hit, big time, within the next 6 months). Things simply can’t continue. The banks cannot afford to sub credit junkies any more.

    Reply
    Please complete the required fields.



  • David – the bald man has a very good point. They are suggesting a rate cut just to keep afloat. A resurgence is rather unlikely

    Reply
    Please complete the required fields.



  • A resurgence is likely if rates are dropped.

    House prices haven’t started dropping they have just slowed.

    A rate cut will allow them to take off again.

    Reply
    Please complete the required fields.



  • House price crash is coming . . .

    Reasons why?

    Couples living in 1/2 bed apartments looking to upgrade to family home are screwed. While their flat may have risen to 100K from 50K when they bought it, a good family home now costs 200K instead of 100K. Upshot, while they have gained 50K on their flat they now need a 150K mortgage, with rising mortgage rates, to buy a family home – on top of having kids!!

    All this coincides beautifully with our first batch of graduates, lumbered with debt to the tune of 30K-40K, looking for a starter flat.

    You’d almost think someone engineered this . . .

    These two groups, first-time buyers and starter families, are the wheels of the property market (not big, fat bacon, tomato and lettuce sandwiches). Looks like the wheels are about to come off.

    Reply
    Please complete the required fields.



  • David

    Asking prices are decreasing across the board in my area (the ‘superficially affluent’ south) by around 3-6% over the last 60 days…..do you count that as slowing or dropping?

    If the base rate drops by 0.25% and *if* the lenders follow it down (how big is that if?), most of them will be where they were pre credit crunch, ie 1.25% above where they were just over a year ago.

    So, still a bit of a price hike for borrowers…..and basic food prices? (up)…and oil price? (up)…….any guesses on future inflation figures?

    Reply
    Please complete the required fields.



  • cutting interest rates doesn’t look like it will stop the US real estate plummet – but I guess we’re different, eh?

    Different as in more in debt, more dependent on consumer spending and feelgood, and more dependent on successful financial industry….uh-oh Chongo, *we* are Danger Island (you have to be a certain age…)

    Reply
    Please complete the required fields.



  • cutting interest rates doesn’t look like it will stop the US real estate plummet – but I guess we’re different, eh?

    Different as in more in debt, more dependent on consumer spending and feelgood, and more dependent on successful financial industry….uh-oh Chongo, *we* are Danger Island (you have to be a certain age…)

    Reply
    Please complete the required fields.



  • Will a cut in the BoE’s base interest rate lead to a resurgence in house prices. That depends purely upon the divergence between the Banks’ mortgage rates and the BoE’s base rate. Politically, this is excellent. Gordon Broone can continue to claim that Brit-Scotland’s economy is a miracle because base rates are low. “People of Brit-Scotland, you are only loosing your homes because those nasty, nasty, greedy Banks are raising their mortgage rates. It is not the Government’s fault so I will continue to let you vote for me as I waste Sterling Billions on my social-engineering experiments.”

    Logically, why should the CPI and RPI measures diverge? If these measures of inflation diverge, so why can BoE Base Rate and Banks’ Mortgage Rates diverge?

    Reply
    Please complete the required fields.



  • The points are:

    1, If the BOE cuts rates, the mortgage lenders won’t (or can’t) neccesarily follow suit.

    2, Inflation control is also a factor likely against a cut in rates.

    3, The effects of the NR episode have also yet to be seen in the house price data, look out for next months figures is my tip.

    Reply
    Please complete the required fields.



  • How ‘convenient’ that the OECD has hinted that rates might need to be cut. Now, when there is a surprise cut next week, we will all be told that it is sound management of the economy and all is well.

    Then we will have to put up with a month of the Brown grin. Then he will be re-elected with an increased majority. Then interest rates will whack back up again.

    The wild card would be King resigning of course. Now that would be interesting…

    Reply
    Please complete the required fields.



  • planning4acrash says:

    Oh, Cornishman, if only, imagine if he cited tales of corruption, a facade of independence at the bank. That would be newsworthy!

    Rewind a bit, why did we DESTROY our economy to prop up buy to let investors? It could have been so different.

    Reply
    Please complete the required fields.



  • Historical evidence from a number of countries shows that house price crashes have always continued unabated despite interest rate cuts, and there is no reason to suppose that this crash will be any different.

    Reply
    Please complete the required fields.



  • Eyeoftheweasel says:

    The only logical answer, as to why BTL has been allowed to detroy the economy, is that Brown didn’t expect Labour to still be running the country when the sh*t hit the fan. He was hoping the Tories would be in by then so they could take the blame. Maybe that’s why there’s all this talk of an early election, and my money’s on Labour to take a dive.

    Reply
    Please complete the required fields.



  • waitingfor hpc says:

    Guys – Inflations is a REAL problem. ANy cut will be short lived. My raw material has just gone up 9% next month and another 10-15% in January!!!!
    I buy softwood which has gone up 50% in 12 months! To name but a few. The bank will have to act in the end.

    Reply
    Please complete the required fields.



  • Surely most consumers – especially FTBs – are losing their appetites for facile debt accumulation fuelled by cheap money and its increasingly evident disastrous consequences.

    Middle English morgage, from Old French : mort, dead (from Vulgar Latin *mortus, from Latin mortuus , past participle of mor, to die; see mer- in Indo-European roots) + gage, pledge (of Germanic origin).]

    Reply
    Please complete the required fields.



  • I don’t think there is any imminent prospect of a rate cut. Recent CPI figures are down but I expect these to head back above 2% very soon. I don’t think the MPC is in any mood for rate cutting at the moment. I only see inflation coming down significantly if the economy takes a nosedive and I think that would be because we would already be in a HPC.

    Reply
    Please complete the required fields.



  • planning4acrash says:

    Ricky B. We cut rates soon after the 1990’s crash and house prices stopped falling as much as they were before, but kept going, the cutting of rates then prolonged the crash, softened its blow, didn’t stop the race to the bottom, won’t stop the race to the bottom.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>