Thursday, July 14, 2016

Help for housing on it’s way (This is for libby)

Interest rates could be cut to new low

The Bank of England could make the first cut to UK interest rates in more than seven years on Thursday. Mark Carney, the Bank governor, has indicated that the Monetary Policy Committee (MPC) would vote to cut rates in July or August. The probable reduction from 0.5% to 0.25% is intended to boost the UK economy in the wake of the Brexit vote.

Posted by hpwatcher @ 07:36 AM (7057 views)
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10 thoughts on “Help for housing on it’s way (This is for libby)

  • britishblue says:

    I believe Brexit is an excuse to cut interest rates, rather than the cause. a 0.25% drop will do little for the real economy but will lower the currency, which every major country around the world has been trying to do. Being at 1.20 to the Euro and 1.30 to the dollar isn’t low enough to hurt the economy, but is a good competitive advantage for exporters and attracting foreign investment into UK business.

    Of topic. But of great interest. Does anyone know whether May or Hammond have a buy to let property empire or have many assets in property? If they don’t have vested interests in these areas then we may see an interesting take on the housing market

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  • I believe Brexit is an excuse

    Indeed. And George O’s latest admission that his spending targets won’t be met, smacks of pure opportunism.

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  • They no longer bother to explain why Brexit would cause interest rates to rise (to attract much-needed foreign investment) – Carney before the referendum, AND to fall (to help a faltering economy) – Carney after the referendum.

    “How silly”, said Alice “how can anything both rise and fall”. The Cheshire cat grinned.

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  • @3 They’re expected to be lowered in the short term, but likely to have to be raised in the medium term. I’ve read articles from before the referendum that predicted as much.

    In 7 years of bluster about raising rates, there’s never actually been an expedient reason to do so (but no end of excuses as to why not to). Now it finally looks like the market might force their hand. Even if they lower rates next month, the odds of them being raised back above 0.5% within a year are surely higher than any time since 2009.

    @2

    I seem to remember commentators being surprised that he didn’t scrap that last pledge when the last round of bad economic news came out last year (Chinese stockmarket). It was the stupidest of his pledges anyway, since you don’t need to run a primary surplus, much less an absolute surplus to bring down debt. But he has always been looking for an excuse to scrap it for some time, and this was obviously a once-in-a-generation opportunity. The fact that he bothered to take that opportunity, suggests that he did not expect to lose his job, which is quite funny really.

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  • @4 – 1st sentence. Maybe, but Carney was talking about the immediate future in both statements.

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  • It still amazes me that people justify borrowing huge amounts of money and being proud to be over leveraged to prop up the housing market

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  • @1 If a PM or chancellor own a home when they get into office, they automatically become a BTL unless they sell it (or leave it empty!). I wonder what the tax treatment of free accommodation in Prime London is BTW. And of course if David Cameron is paying Benefit In Kind tax on the free accommodation in his mate’s £16.8m Holland Park house:
    http://www.theguardian.com/politics/2016/jul/14/david-cameron-17m-holland-park-west-london-townhouse
    And I’m sure the relevant authorities are keeping an eye on DC to make sure that it’s not a quid pro quo for some juicy government favours.
    No doubt if my employer gave me a free place to stay instead of part of my salary, HMRC would be all over it

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  • It still amazes me that people justify borrowing huge amounts of money and being proud to be over leveraged to prop up the housing market

    It’s to buy their dream home – rather than ‘prop-up’ anything.

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  • “It’s to buy their dream home – rather than ‘prop-up’ anything.”

    The first is the buyer’s intention, the second the intention of the string-pullers.

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  • BOE is like a rabbit in the headlights. They will cut rates if Sterling keeps rising from its bottom because they have to off-set potential tariffs and start exporting to new markets. That cannot occur fast without Sterling at a lower value.

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