Friday, Jul 24, 2015

A temporary rise until the economy goes down again?

Telegraph: End of cheap mortgage boom as big banks raise rates

Stampede for fixed mortgages expected as Barclays and Santander increase rates and borrowers scramble to beat the winter Bank of England rate rise. Banks and building societies will begin to withdraw their best mortgage deals next week as home owners scramble to beat the rise in interest rates this winter.

Posted by hpwatcher @ 10:23 PM (8537 views)
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1. icarus said...

Low mortgage rates were due to inter-bank competition for limited business.

Re-mortgaging has increased the demand for loans, so upward pressure on prices (mortgage rates).

Rising mortgage rates are due more to this and to the rising cost of inter-bank lending than to a scramble to beat a rise in the BoE rate, which is always just over the horizon - how do we know how the MPC will vote in 6 months time? Especially after this:

Saturday, July 25, 2015 08:04AM Report Comment

2. reticent said...


Totally agree. It will happen eventually though and it looks more likely this time than it did this time last year when Europe was entering deflation.

Saturday, July 25, 2015 09:18AM Report Comment

3. hpwatcher said...

CB's the world over - especially the FED - want to be seen to be doing the ''right thing'' - raising interest rates...but they can't.

Saturday, July 25, 2015 09:26AM Report Comment

4. mark said...

a total crash (reset) is what is needed to bring things back to a normal level

Saturday, July 25, 2015 01:00PM Report Comment

5. Mombers said...

Negative rates around the corner though, Libby?

Saturday, July 25, 2015 09:12PM Report Comment

6. bidin'matime said...

Remortgaging is also a sign of 'equity withdrawal' as people borrow to pay off credit card and other debts - which arise partly due to their higher mortgage commitments, as well as lower incomes. This was a significant feature of the pre-crisis phase (and one which, as an accountant, I witnessed many times).

Some of the comments on the original article are good - I particularly like this little tail posted by Cortex UK....

"An antique dealer finds a table in a house clearance, on which he thinks he can make a good profit. He marks it up at £100 and puts it in the window of his shop. A week later, another dealer walks by and sees it. He also likes the table, and thinks he can get a bit more for it, so he buys it and puts it in his window for £105. A week after that, the original dealer is walking by the second dealer's shop and sees the table again. Realising how much of a sure bet it must be, he re-buys it and takes it back to his shop - and puts it up for £110. This goes on for a few weeks until the table reaches £150.

One day, the dealer holding the table at that time waits on the day the other dealer is due to turn up and buy the table back, but he doesn't show. The next day, still no show. Or the next day. So he marches down to the other dealer's shop, storms through the door, and demands "Why haven't you bought the table back? This thing went up in value 50% in just a few weeks! We were on to a good thing there!".

This is the UK housing market."

Sunday, July 26, 2015 07:33AM Report Comment

7. taffee said...

Tulip mania reached its peak during the winter of 1636–37, when some bulbs were reportedly changing hands ten times in a day. No deliveries were ever made to fulfil any of these contracts, because in February 1637, tulip bulb contract prices collapsed abruptly and the trade of tulips ground to a halt.[29] The collapse began in Haarlem, when, for the first time, buyers apparently refused to show up at a routine bulb auction. This may have been because Haarlem was then at the height of an outbreak of bubonic plague. While the existence of the plague may have helped create a culture of fatalistic risk-taking that allowed the speculation to skyrocket in the first place, this outbreak might also have helped to burst the bubble.[30]

Sunday, July 26, 2015 10:40AM Report Comment

8. mombers said...

Negative mortgage rates just around the corner though Libertas, right?

Sunday, July 26, 2015 02:04PM Report Comment

9. taffee said...

Negative interest rates has without doubt got to be the most ridiculous economic policy ever and rather than
Be celebrated should be thought of as confirmation you need to be very very worried

The only reason the currency doesn't sink is that most western economies are on near zero
Rates and money printing

Sunday, July 26, 2015 03:02PM Report Comment

10. bidin'matime said...

Indeed - globalisation is the worry - if there was only one 'world currency', then they could continue to debase it - and steal wealth from the 'ordinary people' - unhindered. Then we'd be left with revolution as the only tool...

Monday, July 27, 2015 06:26AM Report Comment

11. taffee said...

Lucky the new world order hasn't invented websites where people disclose all their info thoughts opinions and photos along
With 'friends' lists of people they don't even know
and are encouraged to surf the net which could be potentially used against the user if required

Now that would be a way to quell an uprising!

Monday, July 27, 2015 11:55AM Report Comment

12. libertas said...

This is ludicrous. Swap rates continue to fall, along with oil prices and Sterling rising in value, causing deflation.

I predict a rate cut if Sterling keeps rising against the Euro.

Monday, July 27, 2015 01:59PM Report Comment

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14. Bubbasparks01 said...

Afternoon all, as a long-time lurker and occasional commenter (back in the malct, GC, Titanic and Flashman days), thought I would pop in to say hello and goodbye as I have finally given in to the inevitable and bought a house. Maybe that same house will be 25% cheaper in 3 years; maybe not but I'm tired of waiting and having saved up a decent deposit should be mortgage free in 8-10 years.

Good luck to all; some of the advice and comments on here have been invaluable over the years and greatly appreciated.

Tuesday, July 28, 2015 01:53PM Report Comment

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