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Low interest rates raise house prices but boost birth rates, new research by BoE


Democorruptcy

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Democorruptcy

Dubious?:

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Low interest rates can raise house prices-but also boost birth rates, new research by the Bank of England suggests.

Researchers at the UK’s central bank set out to investigate whether its policy and mortgage rates can impact couples’ decisions on whether or not to have children.

They found that cutting interest rates appeared to stimulate more than just the economy, with an extra 14,500 babies born in 2009 after it slashed borrowing costs during the global financial crisis.

“Overall, our paper suggests monetary policy can have spillover effects on a host of economic and social outcomes,” researchers concluded.

However the Bank also issued a warning on Monday that ultra-low borrowing costs have fuelled a huge property boom which have pushed house prices beyond the reach of young buyers.

As a result, the Bank said that the rise in average house prices relative to incomes comes following “dramatic” decline in real interest rates.

Fergus Cumming and Lisa Dettling, the Bank of England researchers analysing the links between UK mortgage rates and births, published their findings in the paper: ‘Monetary policy and birth rates: the effect of mortgage rate pass-through on fertility’.

They estimated that for each one percentage point fall in benchmark interest rates, birth rates rose by 5% among families paying adjustable-rate mortgages. These are mortgages which go up or down along with the Bank of England’s Bank Rate.

"On average for the UK, a one-percentage-point decline in the policy rate increases birth rates by 2%," they said in the paper.

In contrast with Britain, the birth rate in the United States fell during the period studied by the researchers. This was linked to the prevalence of fixed-rate mortgages in the United States and the impact of property price declines.

"Our descriptive comparisons with the U.S. suggest that if more families had been able to obtain a lower interest rate, the U.S. might not have experienced as severe of a 'baby bust' in the Great Recession," they said.

The paper concluded: “Still, short-term fluctuations in birth rates can also have important effects on the economy. Families who move forward their child-bearing plans will also move forward any associated consumer spending.

“And year-to-year fluctuations in cohorts and class sizes can have important implications for educational attainment and future labor market outcomes. Overall, our paper suggests monetary policy can have spillover effects on a host of economic and social outcomes.

https://www.hl.co.uk/news/2019/12/24/low-interest-rates-can-cause-a-baby-boom-bank-of-england-suggests?

 

 

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1 hour ago, Democorruptcy said:

Low interest rates can raise house prices-but also boost birth rates, new research by the Bank of England suggests.

Oh do eff off.  Bullocks.  It's immigrants, followed by children of immigrants.

1 hour ago, Democorruptcy said:

“Overall, our paper suggests monetary policy can have spillover effects on a host of economic and social outcomes,” researchers concluded.

No effing shote, Sherlock!

1 hour ago, Democorruptcy said:

However the Bank also issued a warning on Monday that ultra-low borrowing costs have fuelled a huge property boom which have pushed house prices beyond the reach of young buyers.

Yet more, who woulda thunk it.

1 hour ago, Democorruptcy said:

They estimated that for each one percentage point fall in benchmark interest rates, birth rates rose by 5% among families paying adjustable-rate mortgages. These are mortgages which go up or down along with the Bank of England’s Bank Rate.

Correlation is not causation.  You PPE types oughta know that.

1 hour ago, Democorruptcy said:

In contrast with Britain, the birth rate in the United States fell during the period studied by the researchers. This was linked to the prevalence of fixed-rate mortgages in the United States and the impact of property price declines.

Help, I can't read any more.

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  • 3 weeks later...

Low interest rates have done a lot more harm than just raise house prices.  It affects everyone, youngish wouldbe house buyers and old wouldbe pensioners in a myriad of ways from house prices, to generational inequality through inheritance, to social issues, to pensioner cash flow poverty, to increased reliance on the taxpayer, to clogging up the job market.  And even businesses in the longer term.  Coupled with access to credit, it only benefits those who had the assets to start with and those who now lend the money.  A load of debt rather than being able to pay closer to out of income.  And a load of debt is a load of debt regardless of income.  A liability and cash flow are two very different things, ask any business.  Time to fess up to what a calamitous move these so called experts made as they attempted to paper over their litany of past mistakes over the decades.  This will end up costing far more, with intetest.

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