interes rare rises

the banks must be chomping at the bit to put them up, however it will be a good while yet, and sign of interest rate rises will plunge the housing market into further gloom and that really wont win many votes

post election.

Not till 2011

In November it was reported that the average of mortgage customers was paying 0.5% more than a year ago in the UK.

talk of the US putting base rate up by 0.5% in new year, and personally think the UK will see a series of rises after May regardless of a pattern of following any global rises beforehand.

Hod on to your hats.

Jim

There is absolutely no talk of the US putting up rates any time soon! Bernanke has made it absolutely clear that rates will not increase for the "forseeable future"!

Rtaes willnot rise in the UK until 2011. Already we have seen Europe come out of recession only for weaker signals to start coming out. Weaker output and 1 million extra jobs lost has not helped. The UK is treading a tightrope, and the ONLY silver lining is that House prices have not fallen further, ensuring banks and building societies are under less pressure than they would otherwise have been. Inflation is inevitably going to increase slightly in next 3 or 4 months before we see it falling once more. Low interest rates are here for teh forseeable future

Oh and Jim

Mortgages mmay well be 1% more expensive than a year ago, but please remember , they are probably 1-1.5% cheaper than 6 months ago!!

Please do not get too carried away with statistics like that. Mortgage rates are falling rapidly at present , as lenders fight for teh business. RBS failed to met its lending target last year , and is being very aggressive in the market place, particularly at 90% where they have a 2 year tracker at 4.79%. N Rock are coming back into the market next year and Nationwide, Abbey and Woolwich are cuttung rates and fees regularly

At least there is no sign of inflation rising.

imo i believe interest rates wont be above 2.5% come xmas 2011. they may climb slightly post election, but i mean slightly, then 2011 they will climb

yep

As if central banks can set interest rates!

Perfect storm on the bow - a gilt inventory that can't be sold + inflation creeping back into the numbers. Batten down the hatches!

http://www.telegraph.co.uk/news/worldnews/1564924/Zimbabwe-interest-rates-up-to-800pc.html

chisel 15 Dec 09:46


Jim

There is absolutely no talk of the US putting up rates any time soon! Bernanke has made it absolutely clear that rates will not increase for the "forseeable future"!


Jim, you still think rates are going up in the STates any time soon after yesterdays Fed meeting. Absolutely no chance!

Not soon enough. In fact interest rates have been far too low for years and we are killing our currency as is everyone else. Paper money RIP.

when they do (& probably very quickly) housing market will suffer BIG TIME, inevitable really as still nowhere near fair value

You know what.
I think chisel maybe correct regarding the economy,inflation and house prices. Through out the year most of you guys have been predicting Armageddon-
inflation to rise to painful levels.
house prices to crash.
No one wanting to buy Government debt etc. etc.

I used to believe this would happen.
But you know what I think in a years time. We'll all be no worse off. Ok we'll be paying a few pennies more in tax. But every budget gives us that scenario.
I've come round to thinking "it's a lot of chatter, a lot of fuss over nothing. It will not occur.
FACT

YOU CAN BUMP THIS THEAD UP ON 30th December 2010 and realise I'm correct. :)

Happy New Year to all you doomongers waiting for a double dip/crash.

when the lovable mr lamont stood on the steps of downing street interest rates went to 22,5 % for 6 hours and we are still here,i no most on here think they invented the world yesterday,but even those who are 50 have seen it all before

It will happen Bobby, government are just delaying the inevitable at the moment.

Bobby is chisels other alias.

:^0 nah I'm not chisel's alias. As I said I believe taxes will rise by a penny or two. Vat might go to 20%. But spending on plastic in the shops and house prices will continue to rise.
Btw apart from chomping your finger nails and wetting your knickers what are you doing to hedge against this so called Financial tsunami?

Ive done plenty thankyou. Ive reduced my families sterling cash holdings by 75% since last spring and have further plans in hand to deal with the rest at short notice.
What have you done apart from listen to Chisels rants and ignore the facts?

Ok.
Well since about 1995 I've been mortgage free.
made a few bob shorting Bradford and Bingley from £2.10 downwards when people were talking of it being taken over when the shareprice stood at £2 :^0
Made even more shorting Northern Rock.
But gave some of it back shorting the£ :(
But currently unsure of what to do now. The FTSE 100 obviously does not reflect UK P.L.C as most companies in the FTSE do not generate their income from the UK. As to what companies will fold (inside the FTSE 100 or 250) I'm unsure. Some are bound to if this financial disaster arrives.
But imo the FTSE 100 will not melt to 3000 or whatever the doomongers are predicting.
The action will be in currencies. But which one and when??
That's the $64,000 question......

Bobby

LOL, . It is a cardinal sin to agree with anything that i write! Funny thing is I have been right about how things were going for some time. I said that the lack of supply would ensure prices stayed stable , and they did. I also said that until interest rates rise, there will be litte pressure on house prices falling in value . Well, for the time being interest rates aregoing to s tay low. Banks are replenishing their balan ce sheets, and victories in bankl charge case ensures they keep even more cash. They will not be paying dividends for some time, and unemployment is not as bad as first predicted.

House prices rely solely on the availability of mortgage finance, and mortgage finance is becoming more widely available and at higher loan to values. Is this enough to ensure that the number of new mortgage meets demand during 2010. For tnow I would say yes! So HAppy New year, hope we all have a good one!

You also said (housing thread 08)

chisel 08 Nov 17:17


deflation is a cast oiron certainty in the next three or 4 months

chisel always claims victory as if its all over. Just because House prices in some areas have risen for a few months and unemployment is rising slower than expected doent mean much. Both will be hit badly when the Public Sector faces reality later in 2010.
He just doesnt see that Brown has thrown everything he can to delay the real recession until after the GE by which time we will be in 10X the mess we would have been had we a Govt that wasnt completely irresponsible.

And now we get this

chisel 17 Dec 10:59


Larry

All I said is that inflation would fall well below the 2% target.

Potlis

at what level did inflation hit a low ?

at what level did inflation hit a low ?

Why dont you look it up?
you might discover that CPI never went negative, in fact prices have risen every month since your prediction in Nov 08.
But it won't stop you continuing to claim "prices are falling"

chisel 08 Nov 17:17

deflation is a cast oiron certainty in the next three or 4 months

Is that you, or not?

nation full of chisels + tabloid chancellor = bankrupt country

Just been offered a 3 year fixed at 4.49 with 200 transfer - currently on SVR of 4.24. By the end of the 3 year fixed would own around 35-40 of the house. I'm thinking snap up the offer but grateful for another view.

Just been offered a 3 year fixed at 4.49 with 200 transfer - currently on SVR of 4.24. By the end of the 3 year fixed would own around 35-40 of the house. I'm thinking snap up the offer but grateful for another view.

Is that with Abbey?

Cant really knock the deal can you? What sort of sum do you owe. If you have a large mortgage it may be worth trying elswher. If not that is about as good as it gets! Best rates elsewhere are about the same but with biggerfees.

The thing is with your SVR the only way is up. Trackers start at about 2.69-2.79% at 70% or 2.94% at 75% , so if you think rates will not increase the Tracker could be a better option. You can have legal fees paid and free valuation, but there is a £1000 fee. Personally I prefer a lifetme tracker with Woolwich than a Fixed rate .

lifetime tracker will be awesome when rates are 8%

It is with the Abbey - we are at about 25% LTV at the moment. Although I like a bet in most forms of life I've always gone towards a fixed rate mortgage wise so I think I'll go with the offer- thanks for the reply.

Gooseman

You have not taken note of a word I wrote. Although a lifetime tarcker you are only tied in for 2 years. This enables you to refinance without penalty any time after that. For your information, Abbey SVR is currently 4.24% which ois 3.74% above Bank rate with many other lenders SVR even higher!!

Have a little think. I know you have no mortgage and rent , but you should not comment on things you know nothing about. 2 years is just 24 months, and if you choose a two year fixed rate, in 24 months you will come off the dealand go onto the lenders variable rate. The need to remortgage will be greater and incur fees that choosing a Lifetime tarcker would not incur.. Plus if rates are still ow, Which I believe they will be then a customer may choos to continue paying the mortgage on the Tracker for teh forseeable future

You have not taken note of a word I wrote

bang on....

rates imo will be above 7% WITHIN 12 MONTHS ,could easily go into double figs ,pound might hit 1.4 euro before falling ,thats if the euro still exists ,and thats a very big if.

Interest rates will go thru the roof now. Inflation will keep rising. The ONE EYED Scottish Monster can NO longer lie. Oh wait a minute he won't be in office come June

i think the rate rises will come within a couple of months - and they could go as high as double figs easily i agree. ultimately i expect the euro to be hammered as well as the pound regardless of rate rises, and us to give up our currency and join the euro for the "collective strength of europe" (blah blah). the euro will teeter on the edge i agree, but i do not believe it is going anywhere. i wish i could say the same about the pound.

Any rate increase will stop people spending It will be like turning off the taps!! Yiou really think tghe BOE will jeopardise a recovery while unemployemnt is rising. ? The BOE is aware that iinflation will spike , and expect it to settle down later in the year. Wages are down, so revenue fror teh governemnt is down , ensuring that the deficit will increase. The government needs revenue , and low interest rates is the only way tehy are going to get it..

Second. The BANKS. a substantial rise in Interest rates will bring panic, more properties to teh market and another house price collapse. teh banks will lose more money and risk teh stability of teh economy now and in the future.

so if rates arent raised chisel, inflation is kerbbed even less. what is the outcome of this? currency issues obviously, and all that brings with it.

so either way now we are in the sht. damned if rates rise and damned if they dont.

If inflation keeps going up, interest rates may increase a little, the pound will get stronger, Exports will become more Expensive, what do we Export??
G.B. can Not feed, fuel or heat itself at the moment.
There is more unemployment on the way, 1000 banks to close, internal bank workers, cleaners, security=15,000+ more unemployed.
Airlines are Next!!
Steel plants in Ukraine shut down a year before the English ones, and Ukraine`s was cheaper.

Don

I would agree with that sentiment to be honest. I feel the result of letting the economy stutter are more damning than if the support id withdrawn. Remember QE is still in progress, and this is likely to be withdrawn before interest rates rise...

I may be wrong, but I am convinced that this is the case. Only time will tell, but one thing is for sure, the economy needs a boost, and with Qe ending , VAT increasing , scrappage scheme running its course, taxes rising, tax credits falling, unemployemnt rising, STamp duty returning there is little to warm the**les!

What do you WANT to happen and why?

"QE is still in progress, and this is likely to be withdrawn before interest rates rise..." How do you know this - King has strongly suggested this is not the case as have other members of the MPC.

chis

I would agree with that sentiment to be honest.

i dont believe it! :)

I feel the result of letting the economy stutter are more damning than if the support id withdrawn. Remember QE is still in progress, and this is likely to be withdrawn before interest rates rise...

harry's comments re qe are true imo. and re letting the economy stutter - it is inevitable - propping it up will make the stutter more painful and potentially we will NEVER recover from it.

I may be wrong, but I am convinced that this is the case. Only time will tell, but one thing is for sure, the economy needs a boost, and with Qe ending , VAT increasing , scrappage scheme running its course, taxes rising, tax credits falling, unemployemnt rising, STamp duty returning there is little to warm the**les!

i know you are convinced, that's been clear for a while. boosting the economy by either/and/or qe and maintaining low rates is a senseless exercise imo. it is not a boost, it is a band aid on a potentially mortal wound and nothing more than an artifical temporary boost that must ultimately fail. if not treated properly it means infection ie the treatment the economy is getting is making things worse because of the damage to currency.you're right, they are trying to prop houses up at any cost, but it just isnt possible, in real terms at least (nominal a different story of course) because holding rates so low crushes our buying power, and right now we are reliant on imports to survive. i dont see how these measures can possibly work - there is no logical reason suggesting they will and we have dug ourselves one almighty great hole.

wounds like this require surgery ie more fundamental changes. imo we would be better off slashing taxes for both individuals and businesses - this is how we stimulate an economy - by making it attractive for business to take place! not by diluting existing wealth - people with real money, and businesses are wise to such a ploy.

the problem of course is how to cope with the debt, since most if not all our income tax goes to servicing its interest payments like it doe right now it is tough to reduce taxation. i would remove bofe from the equation and have the treasury control the currency instead (like kennedy attempted in the us when he tried to cut the fed out), since the bofe "owners" (or former owners who continue to benefit by the tune of 6% interest or something on all currency printed/created and obv we can never pay all the interest by definition becaue to do so they have to create more for us, at more interest, hence the debt forever gets larger). i wuold print treasury currency and dump our existing bofe produced currency and then pay off the debt to crditors with new currency, at as low a percentage of the true debt figure as i could negotiate. taxes could then easily be reduced, since most tax currently is income tax yet none of this goes to service. we can easily start a new currency -if we choose since all money created is based on our future labour as a nation anyway - they are only promissory notes after all. i would just make it the english pound of old. regretably government can still manipulate this new currency for political gain because it is only fiat money - ideally it would be backed by gold to prevent this but brown has made certain of the fact that wecant dothat by selling our gold. of course all this would be painful for those with savings etc as much ofthat would all be lost - but the government could, before now, andeven now, have encouraged people to invest in tangible assets (not houses based on debt though!) rather than fiat currency which is ultimately worthless paper, thus making it all less painful. as a government, they need to get hold of some gold again and if they can get some now for any amount of what is essentially (or wil be) worthless paper then they should do it for our future security.

there is no need for interest on money "borrowed" by the state - because any borrowing is secured against us anyway - we dont need to charge ourselves interest do we! the only reason this is happening at the moment is because certain parties are creaming a little interest out of us when it is unnecessary.

tbh its going to be painful now whatever is done to some extent because we have come too far down the wrong road. there will be social consequences no matter what happens. so if we have to have them anyway, i prefer to make sure that at least at the end of it we are back on a stronger footing rather than having these consequences and muddling our way through so things can never improve.

anyway, reducing taxation is what we need to find a way of achieving. additional money in peoples pocket would help stem mortgage defaults. reduced taxes for businesses encourage entrepreneurship and businesses to open up. this helps the labour market since we return to a situation of competition for workers. i would also place a tax on imports (particularly things we cant possibly produce even if we tried) as soon as i could to stregthen our own production base and therefore force businesses to stay operating here if they want our piece of our consumer market - all encouraging us as a nation to produce for ourselves rather than just consume. they want to make money, so they will. tax revenues would increase even though rates were lower because there would be a bigger pie to take a piece of in due course so infrastructure projects etc could still be funded. moving forward i would maintain a surplus where possible or a minimal deficit to prevent this reoccurring. all this would help the disparity between workers and benefit claimants too because competition for workers would boost wages (and therefore spending too!) and at last we would have an incentive again for people to actually get off their @rse and do something.

of course i would slash defense spending too which is out of control, reduce armed forces and their presence around the world. and look at where other spending reductions could be made without too many social consequences.

What do you WANT to happen and why?

do you mean in terms of policy, or outcome re house prices etc? if the former, see above. if the latter - it makes no difference to me - i privately rent and will be moving abroad at the end of the year.

oh yeh - i would reduce the size of government (drastically!)and its admin costs too. it has become a severe drain on the private sector as im sure most agree.

Don

The point is that more harm will be done if they withdraw support and raise rates than if they concentrate solely on ensuring inflation is close to 2%. The country is still in the **e, and why jeopardise a recovery... Good luck to you though Don. If you have had enough of teh UK fair play.. Where are you going?

NZ - ie as far away from the fray of the rest of the world as possible.

The point is that more harm will be done if they withdraw support and raise rates than if they concentrate solely on ensuring inflation is close to 2%

this is a matter of opinion chis. how is recovery possible when we cant produce anything, and with high unemployment and high taxes being a necessity? it is not possible. yes withdrawing support would be harmful - but that has been a self created situation - the support should never have been put in. as im sure you remember i was against qe and all bailouts too, contrary to the opinion of the masses and those of your ilk. imo the harm would have been less if we just let the markets sort themselves out back then that what we will see now regardless of whether support is withdrawn or not.

This is all bo11ox anyhow. If we can glean one thing from history it is that Governments & Central Banks shouldn't have anything to do with interest rates - it should be left to the market & would be largely down to the avaialble savings & the current ratre of return that you can get on your capital elsewhere.

^^ see the promissory notes banking scam as to how loan money is created and you will realise that there is no need for interest rates at all - since no money is being borrowed. interest is only appropriate where they have something to loan you. they loan you your own money that you give them via promissory note (the loan app) which is money once they monetise it.

but ignoring that yes you're right.

January BOE minutes suggest that rates will stay low despiute rising inflation. It is clear that the committee expect inflation to rise in the months ahead. Do not panic, we have months of low interest rates ahead

23 It was increasingly probable that CPI inflation would rise to well above the 2% target in the early
part of 2010 and remain elevated for several months. The most recent intelligence about the likely
pass-through of the January VAT rise and the potential impact on energy prices from the unusually
cold weather suggested that inflation in the short term would be further above target than the
Committee had previously expected.
24 There was a risk that a sustained period of above-target inflation could cause inflation
expectations to drift upwards. The Committee would monitor closely the extent to which price-level
shocks affected inflation expectations. But so long as expectations remained consistent with the 2%
target, the medium-term outlook for inflation the key consideration when setting monetary policy
would reflect the balance between demand and the supply potential of the economy. The available
evidence continued to suggest that this balance would bear down on inflation for a considerab

And finally

28 Committee members agreed that recent developments did not provide grounds for substantially
changing their views about the medium-term prospects for activity. Given those prospects, and the
significant degree of spare capacity in the economy, Committee members continued to expect inflation
to fall below the target for a period once the various near-term price-level shocks to inflation had
worked through. The projections and analysis prepared in advance of the February Inflation Report
would enable a more comprehensive assessment of the latest information about the supply potential of
the economy, as well as the impact of the various headwinds and tailwinds affecting activity and
inflation.
8
29 The Governor invited the Committee to vote on the proposition that:
Bank Rate should be maintained at 0.5%;
The Bank of England should continue with the programme, as announced following its
5 November meeting, of asset purchases totalling £200 billion financed by the creation of
central bank reserves.
The Committee voted unanimously in favour of the proposition.

Looking at press conference notes from BOE it appears entirely plausible lthat rates will not go up for teh forseeable future. Mervyn King fully expects Inflation to rise well above the 3% target in the short term, and seems happy to accept this fact, as HE fully believes it will fall back as quickly as it arraived!!

Good news mortgage borrowers. All this talk of rate rises is pure fantasy.. For now anyway!