Next interest rate rise could be next month...
15 January 2007, 12:25 AM
#31
15 January 2007, 12:29 AM
#32
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Unless youre in a secure job and you have enough income to cope with potential interest rate rises of anything upto 10% or maybe more then I think you should be concerned
And like JJones I have no debts or a large mortgage and to be honest if house prices came down, although I would lose on my house, it would benefit me to maybe buy some more property.
And like JJones I have no debts or a large mortgage and to be honest if house prices came down, although I would lose on my house, it would benefit me to maybe buy some more property.
15 January 2007, 09:05 AM
#33
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Have we ever in the history of this country had a scenario like this? People spending money that they don't have in the false belief their property will bail them out? Credit to all and sundry and banks seemingly unconcerned about recovery of their debts?
People taking out huge mortgages on an interest only basis,never expecting to pay anything off it,just assuming they will make money on the sale in the future?
How can you have a whole economy based on hopes and beliefs in a housing market?
I know our local county court is doing more than a 'brisk trade' in repossessions and bankruptcies.
I reckon we will be up to 5.5% in February and things will start to snowball.I'm just ensuring the only debt I have is the mortgage,which at the moment isn't large.
I think it's panic time.Not unexpectedly either
People taking out huge mortgages on an interest only basis,never expecting to pay anything off it,just assuming they will make money on the sale in the future?
How can you have a whole economy based on hopes and beliefs in a housing market?
I know our local county court is doing more than a 'brisk trade' in repossessions and bankruptcies.
I reckon we will be up to 5.5% in February and things will start to snowball.I'm just ensuring the only debt I have is the mortgage,which at the moment isn't large.
I think it's panic time.Not unexpectedly either
15 January 2007, 09:22 AM
#34
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There "should" be a few % between them which is how you get your real return, but after tax when rates are high it is easy to deflate your savings. Even then, do you believe the change in money supply is the real rate of inflation (eg 14%) or RPI at 3.9, or to my mind completely discredited CPI at 2.7 (probably 3.1% next week?)
15 January 2007, 11:14 AM
#35
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If you ever get to the state where interest rates are below inflation, it would make sense for people to borrow ever more, and no one will save anything if they know their savings are going to decrease in real terms. Hence, it'd be a very bad thing if interest rates got below the rate of inflation, and encourage everyone to gt into lots of unsustainable debt . . . . sound familiar? The question is whether with the rather dodgy "politically adjusted price index" inflation calculations going on at the moment we've almost made it into that undesirable situation already.
15 January 2007, 11:21 AM
#36
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My understanding is that the M4 broad money supply reflects the amount of our currency. Over the last year the amount has been increased by 14%. There is an argument which states that the growth in money supply should only be equal to the sum of economic growth and inflation. Trouble is, if you add them together you get much less than 14%. Which is why some are saying that inflation is really a lot higher than the official figures.
I understand that the idea behind abandoning the gold standard was so that you could keep lending money even when there was nothing left... you print more of it! With the currency being locked to gold the interest rates would go up as the money ran out which would control credit. Some argue that our whole banking system is fraudulent in this respect.
Maybe I've been listening to the gold bulls too much and the above is an outdated opinion, but at least some of it rings true with what we see now, apparently endless easy credit, and the bank can print more money to get us out of debt. The inflation monster?
I would be interested in contrary views to educate us further...
15 January 2007, 11:26 AM
#37
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Quote:
"How may people got caught in the eighty's , with houses bought for 100K + only to find them worth about 40K following the crash"
I think you'd actually be surprised how small the crash in the eighties was. My sister bought and sold at the very worst time and the price dropped from £54k to £41k. Still enough to give them negative equity, but not as much as people think.
"How may people got caught in the eighty's , with houses bought for 100K + only to find them worth about 40K following the crash"
I think you'd actually be surprised how small the crash in the eighties was. My sister bought and sold at the very worst time and the price dropped from £54k to £41k. Still enough to give them negative equity, but not as much as people think.
15 January 2007, 12:01 PM
#39
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Quote:
"How may people got caught in the eighty's , with houses bought for 100K + only to find them worth about 40K following the crash"
I think you'd actually be surprised how small the crash in the eighties was. My sister bought and sold at the very worst time and the price dropped from £54k to £41k. Still enough to give them negative equity, but not as much as people think.
"How may people got caught in the eighty's , with houses bought for 100K + only to find them worth about 40K following the crash"
I think you'd actually be surprised how small the crash in the eighties was. My sister bought and sold at the very worst time and the price dropped from £54k to £41k. Still enough to give them negative equity, but not as much as people think.
I remember a lot of folk in the Aberdeen area getting their fingers burnt and posting their keys to the building society.
15 January 2007, 12:28 PM
#40
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Quote:
"How may people got caught in the eighty's , with houses bought for 100K + only to find them worth about 40K following the crash"
I think you'd actually be surprised how small the crash in the eighties was. My sister bought and sold at the very worst time and the price dropped from £54k to £41k. Still enough to give them negative equity, but not as much as people think.
"How may people got caught in the eighty's , with houses bought for 100K + only to find them worth about 40K following the crash"
I think you'd actually be surprised how small the crash in the eighties was. My sister bought and sold at the very worst time and the price dropped from £54k to £41k. Still enough to give them negative equity, but not as much as people think.
15 January 2007, 12:43 PM
#41
I remember a lot of folk in the Aberdeen area getting their fingers burnt and posting their keys to the building society.
15 January 2007, 05:29 PM
#42
Interesting <pun intended> ...for those with a 'short' memory 
http://www.bankofengland.co.uk/stati...s/baserate.pdf
http://www.bankofengland.co.uk/stati...s/baserate.pdf
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