Thursday, Mar 05, 2015

Rising rates...bullish for house prices!

Telegraph: Mortgage rates 'unlikely to fall much further' - Virgin Money

Virgin Money has predicted that mortgages are unlikely to get much cheaper, as banks start to worry about cheap home loans affecting their capital strength.
The Bank of England is introducing new rules on the leverage ratio – a capital requirement for banks that industry figures have warned may increase mortgage costs – and housing demand is falling after last year’s boom

Posted by debtserf @ 08:23 PM (5753 views)
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1. wdbeast said...

But this must be wrong as I have been assured several times by a certain blogger that mortgage rates are about to turn negative!

Thursday, March 5, 2015 11:25PM Report Comment

2. libertas said...

This could be a way of saying that mortgage rates could fall a bit further but may rise in the future. Anything to see here?

The new capital requirements could result in a squeeze on high loan to value mortgages whilst rates drop for those with low loan to values.

In other news, BOE will mull a 0.25% interest rate cut to stop Sterling appreciating too much against the Eurozone, but it will be too little, too late as the pound soars to €1.60.

Friday, March 6, 2015 03:38AM Report Comment

3. libertas said...

"as banks start to worry about cheap home loans affecting their capital strength."
So, they admit that banks haven't started to worry about that. But apparently they will, really?!

Said Virgin Money, who is desperate to sell mortgages at 2% before they plunge below 1%.

I predict that rates will keep falling, and that folk will put off buying houses until they begin to see strength in the economy and rates start rising. Part of the boom in 2013 was front running a rate rise that never happened, with thousands plunging into fixed rate mortgages that now look expensive.

Prices may yet fall priced in Sterling, but priced in Euros they are still soaring. They will go up priced in Sterling if a rate cut is used to devalue Sterling or stem its rise, but UK houses are presently doing a Sterling job of retaining value in an asset class that does provide yield.

Friday, March 6, 2015 03:54AM Report Comment

4. libertas said...

Rising rates ARE bullish for houses, if driven by higher employment and higher wages, but as said, I think rates will fall, which if driven by economic weakness, could be negative to house prices.

Friday, March 6, 2015 04:06AM Report Comment

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