Monday, April 11, 2011

OOh eer

Just when you thought it couldn't get any worse... 'mortgages to soar and interest rates to quadruple in a year’

Interest rates are set to quadruple within a year, adding more than £100 a month to a typical mortgage, a senior Bank of England adviser has warned. Families should brace themselves for a rate rise as officials try to get to grips with soaring inflation, said Andrew Sentance, of the Bank’s Monetary Policy Committee.

Posted by mark @ 09:12 AM (4641 views)
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10 thoughts on “OOh eer

  • shipbuilder says:

    The person on the MPC that gets consistently outvoted (and is leaving) tells the press ‘one day they’ll agree with me, you’ll see’, probably shaking his fist for added effect.

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  • building up public fear, cool

    i notice in the sunday papers there were several properties in poole (repos) for sale and 1 was reduced by 2 million

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  • When rates quadruple again in the subsequent year, things may get even more interesting.

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  • mark wadsworth says:

    Yeah! The article may be meaningless in itself, but it might help sow some seeds of doubt into the idea that buying an (overpriced house) is a route to untold wealth.

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  • general congreve says:

    Plenty of property coming on to market round my way, loads of for sale signs and very little existing stock shifting. As the supply increases, so does downwards pressure on prices. All it takes is a couple of homeowners in an area dropping prices dramatically to get a sale and the precedent is set.

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  • Just heard that there are FIVE properties for sale in the affluent street where my sister’s friend lives in St Andrews. She says that normally you could wait ten years for just one to come up. That must be a bit of an exaggeration but you get the picture….

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  • if the high value properties are being reduced in price, this will feed down the line, there seem to be plenty of reductions around prestbury

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  • Plenty on down my way in Hampshire with only a few selling.
    However as mentioned above AS is leaving the MPC.

    The policy of dropping rates so far in the first place was obviously going to import inflation. They didn’t care then so why should they now.

    Let’s not forget they want inflation to help eat the debt.

    They cetainly won’t move rates any quicker than .25% every other month.

    If Japan can keep rates at zero for 20 years what’s to stop us ?

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  • I’m pretty sure I read somewhere that the Government wanting inflation isn’t quite as true as it sounds – in fact, wasn’t it Peston or Flanders that worked it out?

    I think at the time of the crash, a bit of inflation was better than meltdown. Now the meltdown is “sorted”, they can refocus on inflation.

    With IR going up everywhere else, it won’t be far off the UK having to follow suit

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  • If they do it, I think it best if they were quick and hard (e.g. 8% or more), to flush out all the speculators and attract foreign investment, then reduced it to 4 to 5%, say within 1 year, so as not to cause a depression!

    Anything less will just ramp up the agony, but not be enough to burn out the toxic waste.

    The problem is, the interest on new government debt could be quite nasty and may cause bond owners to dump older bonds, so it would be better to do this after the government has slash a lot more of the public sector, to minimise new debt requirements during this period.

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