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EA Today reporting interest rate rise will crash market


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spygirl
7 hours ago, With a crooked smile said:

Interesting to see even EA trade papers talking about rate rises crashing the UK market https://www.estateagenttoday.co.uk/breaking-news/2021/5/future-interest-rate-rise-could-crash-the-market-warns-analyst

Another useless cretin who doesnt understand mortgages.

“In many other countries, including the US, interest rates are fixed for the term of the loan, typically 25 years. In the UK, however, half of outstanding mortgages have interest rates fixed for only two years or less” he writes in the latest housing market snapshot produced by the site. 

No. The Us does offer long fixes - whole loan. And you can remortgage for lower cost at al later time.

Majority  of UK mortgages are variable rate.

Half of new mortgages are fixed for 2 years or less. Rest are variable.

Number of people taking out 2y+ fixes is tiny.

Comments.

 

There is always money in peddling doom. The Government now control the property market, I would ask if it’s in their interests to see a crash? No I don’t think so.

Gormless. UK does not control medium to long interest rates.

If UKGOV wants to prevent a abrupt change in IRs then it needs to run a a slight budget surplus and keep national debt low.

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haroldshand
17 hours ago, With a crooked smile said:

Interesting to see even EA trade papers talking about rate rises crashing the UK

Well if that's the case there will be no interest rate rise then.

Government will increase the margins to say 5% maximum CPI or it will even start printing again, the last thing this government will allow is for the property market to crash.

Do yourself a favour and don't make a TOS error of wishing your life away, look for an alternative to expensive house as a precursor to a happy life before you end up wasting it 

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With a crooked smile
34 minutes ago, haroldshand said:

Do yourself a favour and don't make a TOS error of wishing your life away, look for an alternative to expensive house as a precursor to a happy life before you end up wasting it 

I'm not going to. We're making a fairly big commercial property purchase at the moment (775k). Once thats sorted I intend to buy something residential. I'm not too interested in buying before September this year early next. I'd like to see how things pan out. 

I'm in a position where banks generally won't take all of my income into account. This isn't to bad a place to be in as it probably means we'll buy something in good need of a refurb and get it the way we want it. Subject to National Parks planning regs. 

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Loki
26 minutes ago, With a crooked smile said:

I'm not too interested in buying before September this year early next. I'd like to see how things pan out. 

My rough plan too

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Lightscribe
1 hour ago, haroldshand said:

Well if that's the case there will be no interest rate rise then.

Government will increase the margins to say 5% maximum CPI or it will even start printing again, the last thing this government will allow is for the property market to crash.

Do yourself a favour and don't make a TOS error of wishing your life away, look for an alternative to expensive house as a precursor to a happy life before you end up wasting it 

What makes you think the Fed gives a shit about the over leveraged property market in the U.K.? 

They print, the BoE prints. They raise rates the BoE does here too. Inflation rises then so do rates. That then starts the domino effect of of banks withdrawing long term low interest and high loan to value mortgage products. Without the first time buyer and the lending tap turned off, the market tanks. it’s as simple as that. 

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Option5

Norway banks have already declared that they expect to raise rates in the near future. Partly to cool down a rapidly rising growth in house prices.

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Hancock
48 minutes ago, With a crooked smile said:

. I'm not too interested in buying before September this year early next. I'd like to see how things pan out. 

 

Man after my own heart, hope you get a bargain!

 

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haroldshand
23 minutes ago, Lightscribe said:

What makes you think the Fed gives a shit about the over leveraged property market in the U.K.? 

They print, the BoE prints. They raise rates the BoE does here too. Inflation rises then so do rates. That then starts the domino effect of of banks withdrawing long term low interest and high loan to value mortgage products. Without the first time buyer and the lending tap turned off, the market tanks. it’s as simple as that. 

Yes, lets "hope" that it works out like that

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spygirl
1 hour ago, Lightscribe said:

What makes you think the Fed gives a shit about the over leveraged property market in the U.K.? 

They print, the BoE prints. They raise rates the BoE does here too. Inflation rises then so do rates. That then starts the domino effect of of banks withdrawing long term low interest and high loan to value mortgage products. Without the first time buyer and the lending tap turned off, the market tanks. it’s as simple as that. 

FED -

united-states-interest-rate@2x.png?s=fdt

BoE - 

united-kingdom-interest-rate@2x.png?s=uk

Before Brown, the UK economic cycle followed the US - UK trades a lit more than Europe.

Now the UK has a much less dynamic economy - too many people in public sector and on bennies, not enough working, not sucking from ukgov tit.

Until 2008 the UK always carried a several basis points risk premium over the US.

And banks can draw less money from BoE, so need to raise about 10x more capital for the money they lend.

Bank capital is v expensive. I dont see it getting cheaper, opposite in fact.

An last but not least tye dollarisation of the world economy is almost twice as influential as China wont free the Yuan, using the dollar instead.

 

 

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goldbug9999
Posted (edited)
5 hours ago, Lightscribe said:

What makes you think the Fed gives a shit about the over leveraged property market in the U.K.? 

They print, the BoE prints. They raise rates the BoE does here too. Inflation rises then so do rates. That then starts the domino effect of of banks withdrawing long term low interest and high loan to value mortgage products. Without the first time buyer and the lending tap turned off, the market tanks. it’s as simple as that. 

There isnt going to be a rate rise, inflation will be "solved" by printing even more money to hand out to people so that they can afford the higher prices.

Edited by goldbug9999
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spygirl
7 hours ago, goldbug9999 said:

There isnt going to be a rate rise, inflation will be "solved" by printing even more money to hand out to people so that they can afford the higher prices.

Printing more money will create more inflation.

 

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spygirl
54 minutes ago, Lightscribe said:

Soooo hyperinflation then and the monetary system collapses anyway with UBI and devaluation of currency to toilet paper which would cause instability and chaos.

They know up the top where this is all heading and have done for a long time. Wouldn’t it be more preferable to make the transition in a controlled manner?
At first one bread winner was required to run a household. Then both parents needed to work (more consumer ability, transport, coffee shops, dry cleaners etc). Then when that was tapped out, cheap labour was imported (even more consumer demand, HMO housing etc) 

All of the above continues on the basis of capitalism so long as the population expands. Capitalism is also finite, resources eventually run out, profitability margins become less and less (shrinkflation and inflation). This also inflates assets which takes the wealth to the top keeping it away from the bottom (i.e millennials, zoomers). This in turn means the birth rate drops as the cost of living is much more expensive and people are only able to settle down much later in life and have one child if any. Meanwhile that issue is masked by encouraging population in the non-productive through benefits I.e two children limit. Those children not having access to higher quality education and opportunities means we get less suitable candidates for skilled positions (i.e STEM etc) so have to import more and more our skilled labour. 

But overall in the developed nations across the world we are now seeing population decline. We’ve had a 40 year cycle of prolonged disinflation, but that has now ended into an inflationary inflection point.

The economic result of all of the above is economic collapse and UBI whichever way. So on that basis if they know the long term destination (i.e great reset) wouldn’t they be preparing for that now? 

Once interest rates start to rise, even to the levels of a decade ago in line with inflation, it would send the over leveraged (the wealth in the middle towards the top has been seeking a return in a zero interest rate environment) bust. Debt forgiveness for asset forfeiture. All that now belongs to the government to use in their new UBI utopia. The biggest wealth redistribution in history.

I think the low rates n2000 can be summed up simply -

China joins WTO in 2001ish.

~20 years of China exporting  price deflation.

This stopped ~5 years ago.

 

 

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spygirl

Property in Wales: Buying a home 'unachievable' for many

https://www.bbc.co.uk/news/uk-wales-56996107

In which case - Selling a home is unachievable for many.

Property is now priceless, in the bad way.

Though, to be honest, someone in her position would have never bought a house.

 

Alys Patosit, 41, and her husband Pin, 48, live in Monmouthshire with their two children.

Mrs Patosit works part-time as an administrative assistant and as a carer for the elderly, as well as running her own online business, but said her family might never be able to afford their own home, no matter how hard they work.

"Since returning to work after having my children, I have found myself working three jobs and still having to claim Universal Credit to make ends meet, leaving us with nothing to save for a deposit," she said.

 

 

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spygirl

She be helped by making banks hold more n more capital against all their IO BTL loans.

Simply  pushing up capital  to be help against IO BTL loans by 5% of the loan every year for 20 years.

 

 

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spygirl

And the woman is a very god example how the many and lucrative benefits have pulled people out of FT paid work and into mainly bennies.

These people are never going to get a mortgage until they get FT jobs.

 

 

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reformed nice guy
4 hours ago, Lightscribe said:

Once interest rates start to rise, even to the levels of a decade ago in line with inflation, it would send the over leveraged (the wealth in the middle towards the top has been seeking a return in a zero interest rate environment) bust. Debt forgiveness for asset forfeiture. All that now belongs to the government to use in their new UBI utopia. The biggest wealth redistribution in history.

There is an alternative.

Severely limiting immigration.

It would mean less on the roads, less in schools, less crowded hospitals etc.

It would also push up the wages for workers as those in £1m+ houses would have to start paying £20/h + for non skilled work. Carers wages would also keep going up as its a hard job and needs to be done.

I hate to sound like a Marxist wanker, but it would be a rebalance between labour and capital. Lots of people would initially be miffed that they have a pension worth £2 million but they are having to spend 5% of it per year just to get by or a higher % if they want to keep up appearances

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goldbug9999
4 hours ago, spygirl said:

Printing more money will create more inflation.

No problem, they will just print even more, and if that cause more inflation then they will print more still.

Governments cant allow rates to rise because they have too much debt to service and they need to continually take on more debt to fund public services.

I see only three ways forward:

1) Raise rates and cause the mother of all recessions throwing government and many business and individuals into bankruptcy.

2) Default on gov debt and switch over to directly government issues non-credit money.

3) Counter rising real costs by QE and cash giveaways to the populace, as a side effect all debt gets monetised.

3 will be the chosen approach, not because it works (obviously it doesnt) but because it has that all important plausible deniability factor - "it not our fault, we were only trying to help you by giving you money".

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BurntBread
2 hours ago, goldbug9999 said:

No problem, they will just print even more, and if that cause more inflation then they will print more still.

Governments cant allow rates to rise because they have too much debt to service and they need to continually take on more debt to fund public services.

I see only three ways forward:

1) Raise rates and cause the mother of all recessions throwing government and many business and individuals into bankruptcy.

2) Default on gov debt and switch over to directly government issues non-credit money.

3) Counter rising real costs by QE and cash giveaways to the populace, as a side effect all debt gets monetised.

3 will be the chosen approach, not because it works (obviously it doesnt) but because it has that all important plausible deniability factor - "it not our fault, we were only trying to help you by giving you money".

Economics is too complex for me to grasp more than a few of the concepts, but I don't think that printing holds down rates unless the QE extends to all corporate debt and mortgages. Any debt issuance that isn't immediately bought by the government will have to promise monstrous yield in order to get any buyers. In other words, the market will set high interest rates in this scenario, and the only way for the government to counter that is to be the entire bond market. Even if the government decides to do that (and there will be some people in at least the civil service who are not complete loonies, so that may be harder to agree than you imagine), then the pound collapses. That's not an abstract thing: it means oil and oil products, for example, become massively more expensive compared to wages here, so people ultimately cannot afford to drive or heat their homes. Unless exports are banned, the same applies to anything that can be traded internationally. Food, for example, disappears from the supermarket shelves. It will be like the potato famine.

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MrXxxx
Posted (edited)
2 hours ago, goldbug9999 said:

No problem, they will just print even more, and if that cause more inflation then they will print more still.

Governments cant allow rates to rise because they have too much debt to service and they need to continually take on more debt to fund public services.

I see only three ways forward:

1) Raise rates and cause the mother of all recessions throwing government and many business and individuals into bankruptcy.

2) Default on gov debt and switch over to directly government issues non-credit money.

3) Counter rising real costs by QE and cash giveaways to the populace, as a side effect all debt gets monetised.

3 will be the chosen approach, not because it works (obviously it doesnt) but because it has that all important plausible deniability factor - "it not our fault, we were only trying to help you by giving you money".

4. Liquidate The Royal Family to bail out the UK economy?...and as recompense we will allow them to continue putting their portraits on our worthless currency :-)

 

Edit: meant liquidate their estate....just in case GCHC is monitoring this forum and now have me down for treason!...don't fancy going to the fours corners of the union, especially now that Krankie has decided she is having another referendum!

Edited by MrXxxx
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Noallegiance
8 hours ago, Lightscribe said:

Soooo hyperinflation then and the monetary system collapses anyway with UBI and devaluation of currency to toilet paper which would cause instability and chaos.

They know up the top where this is all heading and have done for a long time. Wouldn’t it be more preferable to make the transition in a controlled manner?
At first one bread winner was required to run a household. Then both parents needed to work (more consumer ability, transport, coffee shops, dry cleaners etc). Then when that was tapped out, cheap labour was imported (even more consumer demand, HMO housing etc) 

All of the above continues on the basis of capitalism so long as the population expands. Capitalism is also finite, resources eventually run out, profitability margins become less and less (shrinkflation and inflation). This also inflates assets which takes the wealth to the top keeping it away from the bottom (i.e millennials, zoomers). This in turn means the birth rate drops as the cost of living is much more expensive and people are only able to settle down much later in life and have one child if any. Meanwhile that issue is masked by encouraging population in the non-productive through benefits I.e two children limit. Those children not having access to higher quality education and opportunities means we get less suitable candidates for skilled positions (i.e STEM etc) so have to import more and more our skilled labour. 

But overall in the developed nations across the world we are now seeing population decline. We’ve had a 40 year cycle of prolonged disinflation, but that has now ended into an inflationary inflection point.

The economic result of all of the above is economic collapse and UBI whichever way. So on that basis if they know the long term destination (i.e great reset) wouldn’t they be preparing for that now? 

Once interest rates start to rise, even to the levels of a decade ago in line with inflation, it would send the over leveraged (the wealth in the middle towards the top has been seeking a return in a zero interest rate environment) bust. Debt forgiveness for asset forfeiture. All that now belongs to the government to use in their new UBI utopia. The biggest wealth redistribution in history.

Not Capitalism.

Nobody alive on planet earth has experienced a capitalist system.

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goldbug9999
Posted (edited)
1 hour ago, BurntBread said:

Economics is too complex for me to grasp more than a few of the concepts, but I don't think that printing holds down rates unless the QE extends to all corporate debt and mortgages. 

Rates dont need to be "held down" its just a number that CBs type into a computer.

Edited by goldbug9999
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spygirl
4 hours ago, goldbug9999 said:

No problem, they will just print even more, and if that cause more inflation then they will print more still.

Governments cant allow rates to rise because they have too much debt to service and they need to continually take on more debt to fund public services.

I see only three ways forward:

1) Raise rates and cause the mother of all recessions throwing government and many business and individuals into bankruptcy.

2) Default on gov debt and switch over to directly government issues non-credit money.

3) Counter rising real costs by QE and cash giveaways to the populace, as a side effect all debt gets monetised.

3 will be the chosen approach, not because it works (obviously it doesnt) but because it has that all important plausible deniability factor - "it not our fault, we were only trying to help you by giving you money".

You are confusing amount of currency with wealth.

You need to think of QE as cutting more n more slices in a cake.

Cutting a cake into 6 rather than 4slices does not make the cake bigger.

UK is at a point where, if the BoE doesn't do some magic and risk a default, that the UK will slip into an emerging country status.

turkey-interest-rate@2x.png?s=tuibon&v=2

UK is at a point where, if you need to worry if you have an unfunded UK public pension.

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goldbug9999
39 minutes ago, spygirl said:

You are confusing amount of currency with wealth.

You need to think of QE as cutting more n more slices in a cake.

Cutting a cake into 6 rather than 4slices does not make the cake bigger.

I never mentioned wealth nor implied that QE creates it.

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