Even lower base rates.

[Ozzie Osmond]

anonymous said:

[redacted]

[Ozzie Osmond]

toppstuff said:

Asset prices are artificially high.

Why do people write this sort of nonsense?

Asset prices are at the market rate. Which is why Vince Commie Cable wants to tax them. You can run but you can't hide from the state taking its slice of pie ... and then a bit more .... and then a bit more ...

[anonymous-user]

speedy_thrills said:

Willy Nilly said:

If the UK economy is so dependant on people making a paper profit on a house then we really should have a rethink on how the country is run.

Many of us have often thought the same.

I'm not saying BOE should seek to have a large step in rates, just gently apply pressure to keep house prices falling towards normal historic measures over the space of the next few years.

I think house prices should drop too even though I may lose out as a direct result of this. I think the pain will be worth it for the gains we will all reap.
House price inflation was never going to be anything more than a noose round out necks. The average Joe benefitted nothing from the house price folly because he tended to own just the one house that he lived in. What he made on paper on that one would be eaten up as soon as it was realised because the price he paid on his next move was inflated. All that happens is that we end up with less leftover to invest, to save, to spend in any other area of the economy.

[sfp]

Perhaps paradoxically (given sentiment in banks) right now's a very good time to be involved in either borrowing OR lending. Plenty making plenty out of both.

[Ozzie Osmond]

How can house prices drop?

Look at the returns available on buy-to-let (say 5%) compared with bank deposits (say 1%).

If you think house prices will drop you are saying buy-to-let rental returns will increase. In which case investors will flood into the market and house prices will be sustained.

Don't hold your breath.

[wolves_wanderer]

Ozzie Osmond said:

How can house prices drop?

Look at the returns available on buy-to-let (say 5%) compared with bank deposits (say 1%).

If you think house prices will drop you are saying buy-to-let rental returns will increase. In which case investors will flood into the market and house prices will be sustained.

Don't hold your breath.

Until you lose your deposit because house prices have dropped...

[GrizzlyBear]

Willy Nilly said:

It does annoy me somewhat. We cannot possibly have people loosing money on their speculation on the property market. It's fine for people to loose money on any other financial gamble, but not their house. They must make money on their house, it's written in law, somewhere.

But it's fine, savers don't mind being paid half of fk all so people can buy a "property" (what a stupid word, it's "a house" not "a property") they can only afford if they get subsidy in the form of low interest rates.

All low interest rates do is keep individuals in houses they can't really afford and it keeps businesses going that should have gone to the wall. Interest rates might as well increase ten fold when lenders aren't lending at any rates, at least it would be worth saving.

If the UK economy is so dependant on people making a paper profit on a house then we really should have a rethink on how the country is run. Here you are treated like a second class citizen if you don't own (the mortgage lender actually owns it) your own house.

It's all bks.

Have to agree,

There should be a balance between savers and borrowers, neither should be excessively punished, sadly that doesn't happen anymore.

[Terminator X]

Art0ir said:

The problem is the artificial interest rates are not sustainable, no matter what the Keynesians will tell you. And the longer we try to keep them down, the more damage that will be done when they adjust according to the market. The BoE is just delaying the inevitable and plugging its ears instead of warning people about what will happen in the future.

Of course they will rise at some point but in case it passed you by the country is fked and will be for many years to come. Good on them for keeping interest rates low. Invest your savings in something else ffs.

TX.

[Art0ir]

Terminator X said:

Art0ir said:

The problem is the artificial interest rates are not sustainable, no matter what the Keynesians will tell you. And the longer we try to keep them down, the more damage that will be done when they adjust according to the market. The BoE is just delaying the inevitable and plugging its ears instead of warning people about what will happen in the future.

Of course they will rise at some point but in case it passed you by the country is fked and will be for many years to come. Good on them for keeping interest rates low. Invest your savings in something else ffs.

TX.

And by working against the markets we're ensuring the country will be in an even worse state when they correct.

The problem with cheap, short term economic gains such as these, is that they often come at the expense of the state of economy in the long term.

You are living on your children's future wealth.

[Terminator X]

What are you gabbling on about? People aren't getting pay rises whilst the cost of everything is shooting up and you think an increase in interest rates is a good idea?! A lot of people are simply struggling to get by with low interest rates being their only lifeline.

TX.

[speedy_thrills]

Well the UK will need to have a substantial change in quality of life...unless you can find a perpetual asset bubble to support it or the UK changes it's focus to export earnings.

As a country there is no easy way to face the fact you are running out of time and money for a soft landing. You can rebuild post-adjustment however.

[Art0ir]

Terminator X said:

What are you gabbling on about? People aren't getting pay rises whilst the cost of everything is shooting up and you think an increase in interest rates is a good idea?! A lot of people are simply struggling to get by with low interest rates being their only lifeline.

TX.

So ignore the economics of the situation then You honestly think having the welfare of UK citizens hinged on artifically engineered interest rates is a good thing?!

Living costs are shooting up because of QE - another failed policy. Banks don't even need to lend any more to turn a profit, they're getting free money to bet on the markets.

[Terminator X]

I agree QE was a bad idea who on earth would ever agree with it. Interest rates must stay low until we get out of the st we're in presently. What are you proposing? Up the rates and force millions to default on their mortgage? Can't see how that is helpful at all.

TX.

[Art0ir]

Terminator X said:

I agree QE was a bad idea who on earth would ever agree with it. Interest rates must stay low until we get out of the st we're in presently. What are you proposing? Up the rates and force millions to default on their mortgage? Can't see how that is helpful at all.

TX.

Gradually increase them. The defaults will come either way unless we start another property bubble, is that what you're proposing?

The situation needs to be tackled head on, not ignored or brushed over with rhetoric.

The smartest thing to do of course is spread the share the problem between debtor and creditor, but it will be a long time before that gets laid on the table.

[jonny70]

Ozzie Osmond said:

How can house prices drop?

Look at the returns available on buy-to-let (say 5%) compared with bank deposits (say 1%).

If you think house prices will drop you are saying buy-to-let rental returns will increase. In which case investors will flood into the market and house prices will be sustained.

Don't hold your breath.

You are wrong . Why when share prices fall people rush to sell them though the yields will increase as the share price falls (same as your house example above) uncertainity/fear and cashing out of an asset that is falling in value is what the average joe does as they see share price fall they get scared they will fall further and sell or that the price going up is over , this behaviour also applies to property.

Also house rpices fall if i/r rise which makes servicing a BTL mortgage alot more and a lot of noive investors with 5% yields will be losing money month on month ie costs more than the rent and actual house price falling so they are unlikelyy to jump on the bandwagon to buy more. just like when hosue rpcies were increasing people were jumping to snap up property as quickly as thy can when prices are falling do you think its the same?

[Murph7355]

crankedup said:

The subject of negative base rates being considered is last weeks news perhaps. People such as me are sick to the back teeth of subsidising those idiots who have taken on large mortgages that they will not be able to service if the base rate rises. Something the Government cannot afford to let happen perhaps, are they in collusion with the 'independent' B.O.E. The point is savers and non mortgage borrowers have been subsidising those mortgages for far too long, perhaps its time the Government cut us some slack and we actually received some interest on our money tied into cash savings.
If people cannot afford a large house they should down size, that is reasonable.

We all have our little pet peeves of people (idiots or otherwise) who we don't particularly appreciate our money subsidising.

I believe your usual response to people noting their own is to advise them to feck off and live somewhere else...?

[Terminator X]

Art0ir said:

Gradually increase them. The defaults will come either way unless we start another property bubble, is that what you're proposing?

I agree they need to gradually rise but not now. There is at least another govt term of pain and imho rates will stay low until then. People have to have job security and pay rises behind them before a rate increase can be considered otherwise we'll be right back where we started in 2008.

TX.

[Ozzie Osmond]

wolves_wanderer said:

Until you lose your deposit because house prices have dropped...

You haven't lost anything. You still have the same income stream. That's how businesses are valued.

[Ozzie Osmond]

jonny70 said:

You are wrong . Why when share prices fall people rush to sell them though the yields will increase as the share price falls (same as your house example above) uncertainity/fear and cashing out of an asset that is falling in value is what the average joe does as they see share price fall they get scared they will fall further and sell or that the price going up is over , this behaviour also applies to property.

So why are stock markets at or near an all-time high? Because of the income stream and solid business foundations. Open your eyes and you will see that I am right.

Property values will only fall significantly if and when the tenants can't pay their rent. As the bank muppets found out when they over lent to people who couldn't pay their mortgages.

[Deva Link]

jonny70 said:

You are wrong . Why when share prices fall people rush to sell them though the yields will increase as the share price falls (same as your house example above) uncertainity/fear and cashing out of an asset that is falling in value is what the average joe does as they see share price fall they get scared they will fall further and sell or that the price going up is over , this behaviour also applies to property.

Does it - the difference between shares and property is that people need somewhere to live and the more uncertain the economy the more likely that is that demand for rented property will continue to increase.