Interest rates going up soon...
Discussion
egor110 said:
Like i said it is a s
tter that those of us who took out affordable mortgages are being punished by low savings interest rates but the reality is if loads of people can't afford to pay there mortgages if rates rise and there is no council/social housing for them what do you thinks there going to do?
Problem is the low interest rates are perpetuating the problem as more people climb onto the housing ladder or extend their existing mortgage. Moral hazard et al. As with the Finance threads, those who cannot meet or barely meet their obligations need to downsize or make changes to their lifestyle. No ifs or buts. Where you draw the line, and there are regional bubbles (e.g. London) to consider, is of course another question.tter that those of us who took out affordable mortgages are being punished by low savings interest rates but the reality is if loads of people can't afford to pay there mortgages if rates rise and there is no council/social housing for them what do you thinks there going to do?egor110 said:
...
Like i said it is a stter that those of us who took out affordable mortgages are being punished by low savings interest rates but the reality is if loads of people can't afford to pay there mortgages if rates rise and there is no council/social housing for them what do you thinks there going to ?...
We would still have the same number of people in the country and the same number of houses. What you get is a redistribution of the existing houses between the existing people. You might get some transient effects for a couple of years as the redistribution isn't fully efficient, but that's all, not mass homelessness.Like i said it is a s
tter that those of us who took out affordable mortgages are being punished by low savings interest rates but the reality is if loads of people can't afford to pay there mortgages if rates rise and there is no council/social housing for them what do you thinks there going to ?...oyster said:
Walford said:
GTIR said:
Walford said:
Blair/Brown should be jailed, this mess will take 20 years to sort
What will, the immigrants taking all our jobs, paedo's on every corner or getting cancer by eating too much cheese?/daily mail
http://www.bbc.co.uk/news/business-28308837
Inflation in sharp rise to 1.9% in June
http://www.bbc.co.uk/news/uk-28308093
More than half of tenants in arrears after benefit cut
http://www.bbc.co.uk/news/business-28305804
Young hit hardest by recession, says IFS
People aged 22-30 saw their household incomes fall by 13% between 2007 and 2013, while those between 31 and 59 saw a 7% drop, according to the Institute of Fiscal Studies (IFS).
Rates going up?
Inflation in sharp rise to 1.9% in June
http://www.bbc.co.uk/news/uk-28308093
More than half of tenants in arrears after benefit cut
http://www.bbc.co.uk/news/business-28305804
Young hit hardest by recession, says IFS
People aged 22-30 saw their household incomes fall by 13% between 2007 and 2013, while those between 31 and 59 saw a 7% drop, according to the Institute of Fiscal Studies (IFS).
Rates going up?
I'm constantly surprised at every meeting of the BOE that rates remain unchanged - Mark Carney has lost some of my respect (not that I suspect it'll keep him up at night). I suspect a half-point rise just to cool the housing market bubble.
I bet it's a hard balancing act though - I don't think they really give a monkey's about savers, or mortgage payers or first time buyers really - what they need to do is control inflation before the tiny shoots of recovery in manufacturing are wiped out, without a massive house price correction that will cripple the banks ability to lend. Mr and Mrs. person on the street doesn't really factor into, other than another factor to manage to ease the banks back to health and ideally sold off before next summer.
I bet it's a hard balancing act though - I don't think they really give a monkey's about savers, or mortgage payers or first time buyers really - what they need to do is control inflation before the tiny shoots of recovery in manufacturing are wiped out, without a massive house price correction that will cripple the banks ability to lend. Mr and Mrs. person on the street doesn't really factor into, other than another factor to manage to ease the banks back to health and ideally sold off before next summer.
Just to combat the doom and gloom, my favourite indicator of UK economic health is looking great at the minute.
Irish exports, which reached all time highs in 2013 (£16.2bn), have continued to grow at a massive pace in the early months of this year. Their trade surplus now sits at 16%.
ROI itself is far, far from recovery. But their biggest trading partner has always been the UK by a huge margin and the health of their exports is indicative of a recovery of some sort across the water.
Irish exports, which reached all time highs in 2013 (£16.2bn), have continued to grow at a massive pace in the early months of this year. Their trade surplus now sits at 16%.
ROI itself is far, far from recovery. But their biggest trading partner has always been the UK by a huge margin and the health of their exports is indicative of a recovery of some sort across the water.
egor110 said:
markcoznottz said:
Not much of a future then is it? Managed decline anyone? Better to be burgled twice in ten years than pay other people's mortgage for them as infinitum and to actively help the government inflate its debt away. Nice .....
Like i said it is a stter that those of us who took out affordable mortgages are being punished by low savings interest rates .Don't like the interest rates you're getting from sticking your cash on deposit in a high street bank? Well, here's an idea, use your brain and invest your money in something that'll make you the return you want!
superkartracer said:
http://www.bbc.co.uk/news/business-28308837
Inflation in sharp rise to 1.9% in June
http://www.bbc.co.uk/news/uk-28308093
More than half of tenants in arrears after benefit cut
http://www.bbc.co.uk/news/business-28305804
Young hit hardest by recession, says IFS
People aged 22-30 saw their household incomes fall by 13% between 2007 and 2013, while those between 31 and 59 saw a 7% drop, according to the Institute of Fiscal Studies (IFS).
Rates going up?
It depends how you look at things doesn't it. If your expenditure on a mortgage is ridiculously cheap because an OAP is having their savings value eroded to save the economy from collapse, then the fact your income is less doesn't matter does it! You could still be better off. That's just one example. There are many ways to present the same data.Inflation in sharp rise to 1.9% in June
http://www.bbc.co.uk/news/uk-28308093
More than half of tenants in arrears after benefit cut
http://www.bbc.co.uk/news/business-28305804
Young hit hardest by recession, says IFS
People aged 22-30 saw their household incomes fall by 13% between 2007 and 2013, while those between 31 and 59 saw a 7% drop, according to the Institute of Fiscal Studies (IFS).
Rates going up?
I know the IFS is 'independent', but I do sometimes wonder if its head is still a member of the Labour party or not?
ClaphamGT3 said:
Sorry but this sentiment really, really irritates me; it is even worse than people expecting intervention to protect over-extended borrowers.
Don't like the interest rates you're getting from sticking your cash on deposit in a high street bank? Well, here's an idea, use your brain and invest your money in something that'll make you the return you want!
Sorry but you popping up to talk up your business model is equally irritating... what is it you do... something along the lines of selling out this country to middle east sovereign funds who are buying up property to rent back to the masses for profit?Don't like the interest rates you're getting from sticking your cash on deposit in a high street bank? Well, here's an idea, use your brain and invest your money in something that'll make you the return you want!
People do not want risk.. they want a secure bank offering a reasonable rate of return on their deposit, which deposit said bank uses to build up its capital reserves and invests to make money itself. Not too much to ask.
Pretty much every asset class is over-bought, over-priced, and represents a huge risk. Putting his life savings / children's uni fund etc at risk is not the clever thing to do tbh
So inflation is now 1.9% but earnings are up 0.7% so given there is no room really left - hence the living standard crunch. It seems very unlikely that interest rates will rise as it would mean a reduction in what people spend in the economy or save or send many over the edge.
We need a period of time where earnings is above inflation then if its over by 0.5% then rates can increase by that amount otherwise people will be fubar
We need a period of time where earnings is above inflation then if its over by 0.5% then rates can increase by that amount otherwise people will be fubar
menousername said:
ClaphamGT3 said:
Sorry but this sentiment really, really irritates me; it is even worse than people expecting intervention to protect over-extended borrowers.
Don't like the interest rates you're getting from sticking your cash on deposit in a high street bank? Well, here's an idea, use your brain and invest your money in something that'll make you the return you want!
Sorry but you popping up to talk up your business model is equally irritating... what is it you do... something along the lines of selling out this country to middle east sovereign funds who are buying up property to rent back to the masses for profit?Don't like the interest rates you're getting from sticking your cash on deposit in a high street bank? Well, here's an idea, use your brain and invest your money in something that'll make you the return you want!
People do not want risk.. they want a secure bank offering a reasonable rate of return on their deposit, which deposit said bank uses to build up its capital reserves and invests to make money itself. Not too much to ask.
Pretty much every asset class is over-bought, over-priced, and represents a huge risk. Putting his life savings / children's uni fund etc at risk is not the clever thing to do tbh
I think that your "people do not want risk" is rather presumptuous; who are you to judge the appetite for risk of the public at large? In reality, some people will be very happy to take risk in order to improve on their returns; others will not. The ones who will not really have no right to moan that they don't like the returns that they are getting, just as those who are willing to take more risk can't moan if they take a knock
fido said:
25bps would be good enough, just to provide a signal to the market, and shake the debt tree a little so as to speak.
Do you really think so? Personally I don't think it would make the blindest bit of difference. People are borrowing at 20% on their credit cards or at 1,000% from Wonga. So 0.25% on the mortgage would make very little difference. £100,000 x 0.25% = c.£20 a month.When interest rates were being cut the 0.5% here and 0.25% there had to be abandoned in favour of cutting rates rapidly to "zero" in order to make any real difference.
Understanding of money is very poor and confidence in money is absolutely on the floor. I think it will take vigorous rises to get people's attention.
Welshbeef said:
So inflation is now 1.9% but earnings are up 0.7% so given there is no room really left - hence the living standard crunch. It seems very unlikely that interest rates will rise as it would mean a reduction in what people spend in the economy or save or send many over the edge.
We need a period of time where earnings is above inflation then if its over by 0.5% then rates can increase by that amount otherwise people will be fubar
Like many have been saying since 2009, or maybe it's just me, things won't swing back until the elephant in the room that we can all sense but apparently can't see, has gone.We need a period of time where earnings is above inflation then if its over by 0.5% then rates can increase by that amount otherwise people will be fubar
You can either go for a hard crash and what is left at the end is 'real' and you work from there.
Or you go for the debt deflation approach which we did, but when is the debt deflated enough that it's no longer the elephant in the room to confidence?
I think the elephant is still there and there is a way to go yet before we hit the deflation 'bottom' and can start to work forwards again.
Any kind of recovery we've seen has imo been stimulated only by low interest rates allowing lots of people to access even cheaper credit.
Ie, JLR is doing booming business, selling lots to the USA it would seem. This is the USA where bundling of sub-prime car credit into CDS/investment options is occurring.
It doesn't take a rocket scientist to see that things are still not as they should be, and you could argue that it all went tits up in the mid 90's. The inertia from the industrial revolution and world wars just dried up and we managed to get another 20 years on credit, but now reality is biting against a backdrop of a load of newly developed nations vying for the limited global wealth.
I think we'll hit the bottom when our apparent wealth has reached some kind of parity with the newly developed nations around the world. I think it's gonna be another 10-15 years of just not much happening.
For many that will sound like a big scary drop in apparent wealth, but that is probably the way things have to go eventually. We can't ALL be rich nations in the world and drive around in Porsche Cayennes on credit. Just look at Greece to see how that worked out
The only way to avoid that is for the UK to do something akin to the industrial revolution again.
Even actuaries are all thinking this too. Just look at annuities. Even for me projecting 35yrs into the future they're giving about 0% growth on my fund value after inflation haha!
Dave
Qwert1e said:
fblm said:
Bless
??See my comment on lack of "confidence in money" above.
Welshbeef said:
So inflation is now 1.9% but earnings are up 0.7% so given there is no room really left - hence the living standard crunch. It seems very unlikely that interest rates will rise as it would mean a reduction in what people spend in the economy or save or send many over the edge.
We need a period of time where earnings is above inflation then if its over by 0.5% then rates can increase by that amount otherwise people will be fubar
Nail-headWe need a period of time where earnings is above inflation then if its over by 0.5% then rates can increase by that amount otherwise people will be fubar
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