FTSE 100 - where over the next few years?
Discussion
Cleverer people than I will look into great depth to answer this question but basically as soon as interest rate rises influence mortgage payments were screwed, people have forgotten what a mortgage is and now spend the money on other stuff hence we think were coming out of recession.
This may be another 3/4 years as fixed deals are in place but sooner or later peoples mortgages will double and treble and then it all comes crashing down.
This may be another 3/4 years as fixed deals are in place but sooner or later peoples mortgages will double and treble and then it all comes crashing down.
MitchT said:
Was having a play around with some charts earlier and noticed that the FTSE 100 appears to have hit its third high since 1996, having hit a similar high on both previous occasions. Make of it what you will ...
Yes but this current high (near high) has been hit much earlier in the economic cycle.That chart is perhaps too compressed on the time axis to really see what has occurred over the years.
If you plot it against other index, US, German, France you will get a better picture of the way the FTSE performs.
In IMO it can be a little optimistic and get ahead of itself at times, with people just looking at the index instead of the component parts.
I would not consider 6800 to be a great entry point!
The European countries are maybe a better bet for the short term (2 years).
If you plot it against other index, US, German, France you will get a better picture of the way the FTSE performs.
In IMO it can be a little optimistic and get ahead of itself at times, with people just looking at the index instead of the component parts.
I would not consider 6800 to be a great entry point!
The European countries are maybe a better bet for the short term (2 years).
DSLiverpool said:
Cleverer people than I will look into great depth to answer this question but basically as soon as interest rate rises influence mortgage payments were screwed, people have forgotten what a mortgage is and now spend the money on other stuff hence we think were coming out of recession.
This may be another 3/4 years as fixed deals are in place but sooner or later peoples mortgages will double and treble and then it all comes crashing down.
Will this be allowed to happen? Only yesterday I was talking to my dad how he remembers 12% mortgages! Half the country would be bankrupt if BOE allowed that to happen again. This may be another 3/4 years as fixed deals are in place but sooner or later peoples mortgages will double and treble and then it all comes crashing down.
Interest rates don't belong at 12% nor do they belong at 0.5% but even at 3% its a huge increase to the people who don't remember having a mortgage or the ones that have a £100 one that used to be £500.
So if it goes up sell the house? only to cash rich speculators as the market will be dead (outside of London) hence shed loads of houses to rent / handed back.
No political party wants this problem so the ConDems are putting it off as long as possible though technically its Carneys decision he still has a line to tow, if Labour get in our other issues will be so destructive that it will not be an issue just another nail in the UK coffin.
I hope I am wrong but I cannot see it being avoided.
So if it goes up sell the house? only to cash rich speculators as the market will be dead (outside of London) hence shed loads of houses to rent / handed back.
No political party wants this problem so the ConDems are putting it off as long as possible though technically its Carneys decision he still has a line to tow, if Labour get in our other issues will be so destructive that it will not be an issue just another nail in the UK coffin.
I hope I am wrong but I cannot see it being avoided.
BoRED S2upid said:
Will this be allowed to happen? Only yesterday I was talking to my dad how he remembers 12% mortgages! Half the country would be bankrupt if BOE allowed that to happen again.
12%! We bought our first property in the endowment heavy, superheated pre-dual income tax relief (MIRAS) frenzy in Summer 88 to beat the August 88 deadline - interest rates were by the then recent-historical nice low ~ 9%. Shortly afterwards there was the ERM debacle and BOE base rates hit 15% in an attempt to defend the currency. Our mortgage rate nearly doubled to over 16%. Fortunately we were able to weather it (many didn't). The withdrawal of MIRAS and the soaring interest rates popped the housing bubble for years. Like many others we were in negative equity, sold 8 years later at a loss and vowed never to buy a property we couldn't afford at double digit interest rates (in retrospect too cautious, given the rates over the last 15 years, but a more comfortable position to be in). Super low interest rates are an anomaly and will change some day, but it's only oldies like us & your dad who remember.
http://www.propertyinvestmentproject.co.uk/propert...
MitchT said:
Was having a play around with some charts earlier and noticed that the FTSE 100 appears to have hit its third high since 1996, having hit a similar high on both previous occasions. Make of it what you will ...
As many 'experts' have said the bubble is close to bursting given what happened after the last two peaks. The driver of this, I have read, would be the governments reducing their Quantitative Easing measures which have artificially inflated the markets way beyond where the economy actually is. When the ordinary person on the street thinks there is something weird going on, there probably is...
DSLiverpool said:
Interest rates don't belong at 12% nor do they belong at 0.5% but even at 3% its a huge increase to the people who don't remember having a mortgage or the ones that have a £100 one that used to be £500.
So if it goes up sell the house? only to cash rich speculators as the market will be dead (outside of London) hence shed loads of houses to rent / handed back.
No political party wants this problem so the ConDems are putting it off as long as possible though technically its Carneys decision he still has a line to tow, if Labour get in our other issues will be so destructive that it will not be an issue just another nail in the UK coffin.
I hope I am wrong but I cannot see it being avoided.
I completely agree with this. when i/r start to rise (wont be till next general election ) peoples mortgages will go up (a lot of folks have got used to super low rates even if i/r go up a few points remmemeber the long term average is about 5 , even at half that will cause big increases for a lot of folks) and it cant last esp if the economy continues to grow. As i/r rise "this current house boom" will come to a sharp end and the market will probably fall .There is a inverse relationship between i/r and house prices.So if it goes up sell the house? only to cash rich speculators as the market will be dead (outside of London) hence shed loads of houses to rent / handed back.
No political party wants this problem so the ConDems are putting it off as long as possible though technically its Carneys decision he still has a line to tow, if Labour get in our other issues will be so destructive that it will not be an issue just another nail in the UK coffin.
I hope I am wrong but I cannot see it being avoided.
The economy has got used used to this medicine to that cant continuously be sustained when things get better. its like a double edged sword. I wonder what the gov will do ? as it has ran out of tools to keep kicking the can down the road.
what do you think dsliverpool?
Edited by jonny70 on Monday 10th March 20:32
One problem facing Carne is that he has inflation over 2%, whereas the US rate is 1.1% and Europe is possible lower (should have checked before typing
)
Should UK inflation rise the normal mechanism for control is to raise the interest rate, and that is a delicate option because of the number of housing loans at what could be considered artificial rates.
By comparison, the US can raise int rates without affecting the majority of mortgagees because they are on fixed rates for the full term of their loans. Most of the low start variable loans have now been re financed.
Europe might actually benefit from a little inflation to aid its recovery (growth)
Might be worth reading about Ireland, a bit scary, here is link giving a brief synopsis
http://en.wikipedia.org/wiki/Irish_property_bubble
)Should UK inflation rise the normal mechanism for control is to raise the interest rate, and that is a delicate option because of the number of housing loans at what could be considered artificial rates.
By comparison, the US can raise int rates without affecting the majority of mortgagees because they are on fixed rates for the full term of their loans. Most of the low start variable loans have now been re financed.
Europe might actually benefit from a little inflation to aid its recovery (growth)
Might be worth reading about Ireland, a bit scary, here is link giving a brief synopsis
http://en.wikipedia.org/wiki/Irish_property_bubble
Early 2000 was the dot com bubble bursting, 2008 was the credit crunch. No doubting equity markets have been buoyed by QE and low interest rates, but we're in far better shape than we were a few years ago.
Take a look at a chart of the market over the past 100 years, and you'll see that the past 14 years has been a small blip. Definitely some resistance at these levels, but we'll be through 7,000 before long.
Take a look at a chart of the market over the past 100 years, and you'll see that the past 14 years has been a small blip. Definitely some resistance at these levels, but we'll be through 7,000 before long.
jonny70 said:
I completely agree with this. when i/r start to rise (wont be till next general election ) peoples mortgages will go up (a lot of folks have got used to super low rates even if i/r go up a few points remmemeber the long term average is about 5 , even at half that will cause big increases for a lot of folks) and it cant last esp if the economy continues to grow. As i/r rise "this current house boom" will come to a sharp end and the market will probably fall .There is a inverse relationship between i/r and house prices.
The economy has got used used to this medicine to that cant continuously be sustained when things get better. its like a double edged sword. I wonder what the gov will do ? as it has ran out of tools to keep kicking the can down the road.
what do you think dsliverpool?
I don't think too deeply these days but I'm thinking stocking up on cheap terrace houses to accommodate the inevitable avalanche of renters might be a good idea.The economy has got used used to this medicine to that cant continuously be sustained when things get better. its like a double edged sword. I wonder what the gov will do ? as it has ran out of tools to keep kicking the can down the road.
what do you think dsliverpool?
Edited by jonny70 on Monday 10th March 20:32
Adjusted for inflation the 2000 FTSE was close to 10000
We'll see 7000 soon.
IRs have painted the Government and BoE into a corner. They've been so low for so low that the whole economy has got used to it being this way. No government will allow a repeat of the early nineties mess up. My bet is that they will stay low for a long time, most people with mortgages less than ten years old would now consider a 5% base rate to be "high" and anyone five years in will think that 1% is impossibly high. It will be undone, but very, very, slowly. So as not to lose votes.
We'll see 7000 soon.
IRs have painted the Government and BoE into a corner. They've been so low for so low that the whole economy has got used to it being this way. No government will allow a repeat of the early nineties mess up. My bet is that they will stay low for a long time, most people with mortgages less than ten years old would now consider a 5% base rate to be "high" and anyone five years in will think that 1% is impossibly high. It will be undone, but very, very, slowly. So as not to lose votes.
SonnyM said:
As many 'experts' have said the bubble is close to bursting given what happened after the last two peaks. The driver of this, I have read, would be the governments reducing their Quantitative Easing measures which have artificially inflated the markets way beyond where the economy actually is.
When the ordinary person on the street thinks there is something weird going on, there probably is...
I think pretty much everyone is thinking this though, and often in markets when everyone thinks the same thing, the opposite happens.When the ordinary person on the street thinks there is something weird going on, there probably is...
I can see FTSE over 7000 easily, I can see 10000 too quite easily.
cymtriks said:
Adjusted for inflation the 2000 FTSE was close to 10000
We'll see 7000 soon.
IRs have painted the Government and BoE into a corner. They've been so low for so low that the whole economy has got used to it being this way. No government will allow a repeat of the early nineties mess up. My bet is that they will stay low for a long time, most people with mortgages less than ten years old would now consider a 5% base rate to be "high" and anyone five years in will think that 1% is impossibly high. It will be undone, but very, very, slowly. So as not to lose votes.
Spot on IMO.We'll see 7000 soon.
IRs have painted the Government and BoE into a corner. They've been so low for so low that the whole economy has got used to it being this way. No government will allow a repeat of the early nineties mess up. My bet is that they will stay low for a long time, most people with mortgages less than ten years old would now consider a 5% base rate to be "high" and anyone five years in will think that 1% is impossibly high. It will be undone, but very, very, slowly. So as not to lose votes.
The whole property market would be severely shaken if interest rates rose quickly to any level above around 1-2%. From speaking with friends and family, people are not putting near enough away to cover off interest rates rising when this occurs; cheap mortage = more money to spend on other stuff. The majority of 'normal' people with mortgages, i.e those not on super wages, will not be able to handle a £500/month mortgage payment rise.
MitchT said:
Was having a play around with some charts earlier and noticed that the FTSE 100 appears to have hit its third high since 1996, having hit a similar high on both previous occasions. Make of it what you will ...
Well, there is clearly support and resistance. So it's likely to fall back to the previous well-established lows. OTOH it could bust through the resistance level quite forcefully.Yes, I said it could go up or down.
Revisitph said:
12%! We bought our first property in the endowment heavy, superheated pre-dual income tax relief (MIRAS) frenzy in Summer 88 to beat the August 88 deadline - interest rates were by the then recent-historical nice low ~ 9%. Shortly afterwards there was the ERM debacle and BOE base rates hit 15% in an attempt to defend the currency. Our mortgage rate nearly doubled to over 16%. Fortunately we were able to weather it (many didn't). The withdrawal of MIRAS and the soaring interest rates popped the housing bubble for years. Like many others we were in negative equity, sold 8 years later at a loss and vowed never to buy a property we couldn't afford at double digit interest rates (in retrospect too cautious, given the rates over the last 15 years, but a more comfortable position to be in).
Super low interest rates are an anomaly and will change some day, but it's only oldies like us & your dad who remember.
http://www.propertyinvestmentproject.co.uk/propert...
12% was when I started taking lodgers in, @ 15% I was glad of the extra income. It taught me the lesson of not getting over committed. When rates went down I kept my payments the same to reduce capital.Super low interest rates are an anomaly and will change some day, but it's only oldies like us & your dad who remember.
http://www.propertyinvestmentproject.co.uk/propert...
Revisitph said:
It's a pity Monty P aren't still around as they could probably produce an excellent sketch of the BoE monthly meeting.A bunch of guys who wish they were somewhere else who manage to reach a consensus on what they can't do.
This would be agreed on in the first five minutes.
The rest of the meeting would be used to produce memorandums to be forw'd to number 11, detailing how they cannot control inflation using int rates so he better devise some tax increases to mop up excess liquidity.
Meeting would end with all those round the table muttering "that sounds fair"
(referring to higher income tax rates.)
vescaegg said:
cymtriks said:
Adjusted for inflation the 2000 FTSE was close to 10000
We'll see 7000 soon.
IRs have painted the Government and BoE into a corner. They've been so low for so low that the whole economy has got used to it being this way. No government will allow a repeat of the early nineties mess up. My bet is that they will stay low for a long time, most people with mortgages less than ten years old would now consider a 5% base rate to be "high" and anyone five years in will think that 1% is impossibly high. It will be undone, but very, very, slowly. So as not to lose votes.
Spot on IMO.We'll see 7000 soon.
IRs have painted the Government and BoE into a corner. They've been so low for so low that the whole economy has got used to it being this way. No government will allow a repeat of the early nineties mess up. My bet is that they will stay low for a long time, most people with mortgages less than ten years old would now consider a 5% base rate to be "high" and anyone five years in will think that 1% is impossibly high. It will be undone, but very, very, slowly. So as not to lose votes.
The whole property market would be severely shaken if interest rates rose quickly to any level above around 1-2%. From speaking with friends and family, people are not putting near enough away to cover off interest rates rising when this occurs; cheap mortage = more money to spend on other stuff. The majority of 'normal' people with mortgages, i.e those not on super wages, will not be able to handle a £500/month mortgage payment rise.
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