Interest rates going up soon...

[RYH64E]

economicpygmy said:

The problem they have is the cost of servicing public debt and the possibility of deflation so I dont believe rates will go up in the short term, they are simple trying to change behaviour.

I doubt it's a bluff, just announcing the possibility causes the pound to rise which is something the BoE tries to avoid because of the impact on exports. Rates are going up, people better get used to it.

After years of being mortgage free I took out a new mortgage last month, hope to pay it off before rates begin to rise...

[DS3R]

Forward guidance from totally independent BoE a while ago "no rise for ages, and the previous indicator we said of unemployment <7% befor we even think about a rise is mere guidance, not a hard and fast rule"

IMF et all say "Osbourne you chump, stop letting this run away, it poses unncessary risk to your economy as the higher prices go, the harder it will be and the greater the [at least perceived] impact of raising rates will be", followed by lots of tutting and "do you property obsessed Brits never learn?"

Conversation in dark corridor with a reminder that despite the massive salary and public line of independence, there is still a boss.

Current guidance from totally indepdent BoE now "well, they need to get re-elected, so think about it before you take out a massive loan, ok?"

[Crafty_]

Sheepshanks said:

0.5% doesn't sound much but that's a two thirds increase in your interest payments.

Yep, luckily for me thats less about half a tank of petrol.

[markcoznottz]

Political class all have housing portfolios, look at what they do rather than what they say, they would have done it by now. Maybe in years, literally 8-10 years. Till then bluff, and keep the can rolling.

[Art0ir]

markcoznottz said:

Political class all have housing portfolios, look at what they do rather than what they say, they would have done it by now. Maybe in years, literally 8-10 years. Till then bluff, and keep the can rolling.

Did you actually listen to the speech?

Osborne and Carney are either the best circus act that every lived or they appear to have a fairly good grasp on the situation.

Carney especially was very honest about the housing market in particular and keen to cool it.

[Du1point8]

Miocene said:

Did a five year fix 3 months ago at 2.88%, had a look yesterday and it's now 3.49%, which is a hefty increase in such a short space of time. Needless to say we're rather happy!

Just tied in at a 2.9% today for 5 years... rather happy with it.

[egor110]

Art0ir said:

Did you actually listen to the speech?

Osborne and Carney are either the best circus act that every lived or they appear to have a fairly good grasp on the situation.

Carney especially was very honest about the housing market in particular and keen to cool it.

why do they want to cool the market? surely people owning there own homes and not needing council houses is a good thing?

[Johnnytheboy]

What I love is the media take on interest rates:

Going down: bad news for savers

Going up: bad news for borrowers

[Art0ir]

egor110 said:

Art0ir said:

Did you actually listen to the speech?

Osborne and Carney are either the best circus act that every lived or they appear to have a fairly good grasp on the situation.

Carney especially was very honest about the housing market in particular and keen to cool it.

why do they want to cool the market? surely people owning there own homes and not needing council houses is a good thing?

Because in Osborne's words, if the trend continues an entire generation will be locked out of the housing market.

He did recognise the opposing wishes of current home owners (whose primary investment is their house) and prospective buyers (who need to be able to afford to get on the ladder).

[egor110]

Art0ir said:

egor110 said:

Art0ir said:

Did you actually listen to the speech?

Osborne and Carney are either the best circus act that every lived or they appear to have a fairly good grasp on the situation.

Carney especially was very honest about the housing market in particular and keen to cool it.

why do they want to cool the market? surely people owning there own homes and not needing council houses is a good thing?

Because in Osborne's words, if the trend continues an entire generation will be locked out of the housing market.

He did recognise the opposing wishes of current home owners (whose primary investment is their house) and prospective buyers (who need to be able to afford to get on the ladder).

so to stop a generation being locked out the housing market you raise the rates so now those on a house struggle and those who want to be in a house are unable?

[economicpygmy]

The problem with letting the housing market go nuts is unproductive captial. They want people spending in the wider economy. And as said above, the risk is future generations being completely locked out; rates going up is the lesser of two evils. That said, I dont believe they will before the election.

[egor110]

economicpygmy said:

The problem with letting the housing market go nuts is unproductive captial. They want people spending in the wider economy. And as said above, the risk is future generations being completely locked out; rates going up is the lesser of two evils. That said, I dont believe they will before the election.

so mortgages go up, rent goes up and you kiss goodbye to spare cash that can be spent in the wider economy.

[rollondeath]

markcoznottz said:

Political class all have housing portfolios, look at what they do rather than what they say, they would have done it by now. Maybe in years, literally 8-10 years. Till then bluff, and keep the can rolling.

Serious? This speech was to prepare the country for the forthcoming rises. 2015 0.25% rise per quarter. Fancy a wager?

[Derek Chevalier]

egor110 said:

economicpygmy said:

The problem with letting the housing market go nuts is unproductive captial. They want people spending in the wider economy. And as said above, the risk is future generations being completely locked out; rates going up is the lesser of two evils. That said, I dont believe they will before the election.

so mortgages go up, rent goes up and you kiss goodbye to spare cash that can be spent in the wider economy.

why do rents go up?

[speedy_thrills]

budfox said:

Interest rates are going nowhere. Too much at stake for he property owning and rent taking elite.

I wouldn’t have quite put it that way but there is a lot of political incentives to keep rates low at the moment, which should happen as long as inflation stays low (i.e. income and retail spending stay flat or negative). The UK seems to be a little unique in that households are really carrying a very high debt level, a small change will likely have a more substantial impact. The housing market still seems fundamentally safe to me, supply is very limited (and it’s in fewer voters interest to change that being realistic) while BOE rates are being held at historic lows.

Even in New Zealand where house prices didn’t fall much and price growth is at about 7-8% nationwide for some years the cash rate is only 3.25% (and the median house price to median income and rent ratios are really staggering). This really is the era of cheap money and high leverage. We should really consider where you invest when the inflation situation is reversed a bit.

[GT03ROB]

I'd put money on a rise before the year is out.

What I've never understood though is the obsession with using interest rates to control the housing market. It's a real sledgehammer with far reaching impacts.

[Gaspode]

GT03ROB said:

I'd put money on a rise before the year is out.

What I've never understood though is the obsession with using interest rates to control the housing market. It's a real sledgehammer with far reaching impacts.

As a saver, I'm all in favour of high interest rates, but I do tend to agree with you about its use to control the housing market. Further stimulus for new building would appear to be a better approach. Manage the supply rather than the demand.

[Welshbeef]

Crafty_ said:

Sheepshanks said:

0.5% doesn't sound much but that's a two thirds increase in your interest payments.

Yep, luckily for me thats less about half a tank of petrol.

So if you have an average car and only fill up on e a month that's £500-600 or multiples of that depending on how often you fill up.

I'd consider that not am insignificant amount like most people.

[anonymous-user]

Welshbeef said:

So if you have an average car and only fill up on e a month that's £500-600 or multiples of that depending on how often you fill up.

I'd consider that not am insignificant amount like most people.

Half a tank is roughly £30-40. Hardly significant.

[powerstroke]

Gaspode said:

GT03ROB said:

I'd put money on a rise before the year is out.

What I've never understood though is the obsession with using interest rates to control the housing market. It's a real sledgehammer with far reaching impacts.

As a saver, I'm all in favour of high interest rates, but I do tend to agree with you about its use to control the housing market. Further stimulus for new building would appear to be a better approach. Manage the supply rather than the demand.

Yes and cure the cause first not the symptoms !seems a massive increase in population combined with the big house builders being more interested in playing games with future values of assets than building houses the best thing would be to make it hard to sit on land and easier to build especially on the many vacant brownfield lots in and around our towns and citys !!!!