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Debate House Prices


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Great news / terrible news.

13567

Comments

  • Sir_Humphrey
    Sir_Humphrey Posts: 1,978 Forumite
    Generali wrote: »
    Yeah, leave the kids with a massive debt. That'll teach them to bounce on the bed until 11pm on Wednesday night.

    It's better than the alternative.
    Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith
  • WTF?_2
    WTF?_2 Posts: 4,592 Forumite
    Sir_Humphrey wrote: »
    It's better than the alternative.

    You seem to think that everything can be managed and controlled by central planning. That just isn't the case.
    --
    Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.
  • Cannon_Fodder
    Cannon_Fodder Posts: 3,980 Forumite
    Yes, the US has been longer in the poop, but have lower interest rates been having the desired effect?

    http://newsvote.bbc.co.uk/1/hi/business/7676275.stm


    Its not that interest rates are very high or even a bit high, its that no Banks wish to let the money out of their sight, almost at any rate.

    If liquidity was restored tomorrow, the economy/businesses/homeowners could afford current IRs.

    Does lowering IRs improve liquidity? It hasn't in 10 months, for the US.
  • Realy
    Realy Posts: 1,017 Forumite
    Cannon_Fodder wrote: »
    Yes, the US has been longer in the poop, but have lower interest rates been having the desired effect?

    http://newsvote.bbc.co.uk/1/hi/business/7676275.stm

    Is building houses the point?
    The economy is more than housing you have no proof it did or did not do anything. It happened and they still have a banking system etc.
    The desired effect is fighting off a deep recession/depression if all you can think about of houses perhaps you could argue it had no effect:rolleyes: but you have not got an alternate reality to compare it to and neither have I so how can you prove it had no effect.
  • chucky
    chucky Posts: 15,170 Forumite
    10,000 Posts Combo Breaker
    Cannon_Fodder wrote: »
    Yes, the US has been longer in the poop, but have lower interest rates been having the desired effect?

    http://newsvote.bbc.co.uk/1/hi/business/7676275.stm


    Its not that interest rates are very high or even a bit high, its that no Banks wish to let the money out of their sight, almost at any rate.

    If liquidity was restored tomorrow, the economy/businesses/homeowners could afford current IRs.

    Does lowering IRs improve liquidity? It hasn't in 10 months, for the US.

    it's the interbank lending rate that you need to look at.

    until this starts moving downwards nothing changes and no liquidity in the market.

    at the moment the Treasury or Bank of England dropping interest rates isn't having a 100% effective on these rates. there a couple of more factors to do with this before they shoot downwards.
  • IveSeenTheLight
    IveSeenTheLight Posts: 13,322 Forumite
    Cannon_Fodder wrote: »
    Have you noticed the current Interest Rate in the US...?
    .

    The US interest rate has absolutely nothing to do with my personal finances.
    I am not an economist, so I dont know the answer, however......

    As I said in an earlier post, if you have debts i.e. mortgages etc, any lowering of the interest rate you pay on those debts is immediately good.

    It means that everymonth the lendors want some cash off me, they want a little bit less

    It means that if I maintain the same payments, I pay off more capital, meaning the lenders ask even less interest payments the following month.

    If you do not have any debts and have savings, then you are obviusly not earning so much from the interest.
    Crucial to this as well, is what the inflation figure is. Now I know it has been increasing in recent times, but with food and oil etc lowering, we can expect inflation to lower as well.

    Hope this clarifies
    :wall:
    What we've got here is....... failure to communicate.
    Some men you just can't reach.
    :wall:
  • IveSeenTheLight
    IveSeenTheLight Posts: 13,322 Forumite
    !!!!!!? wrote: »
    I've said it before - wealth preservation, not making money, is where it's at now.
    Totally, agree, therefore paying less interest on your mortgage (BoE tracked, discounted or by beingpassed onto by banks) means that more people have more money each month to save, pay off more capital, reduce debts etc.

    Therefore you'll agree that for a large number of people in the UK, lower interest rates will help this debt ridden society we live in ;)
    :wall:
    What we've got here is....... failure to communicate.
    Some men you just can't reach.
    :wall:
  • Cannon_Fodder
    Cannon_Fodder Posts: 3,980 Forumite
    Realy wrote: »
    Is building houses the point?
    The economy is more than housing you have no proof it did or did not do anything. It happened and they still have a banking system etc.
    The desired effect is fighting off a deep recession/depression if all you can think about of houses perhaps you could argue it had no effect:rolleyes: but you have not got an alternate reality to compare it to and neither have I so how can you prove it had no effect.


    Well, I rashly assumed that some housing related evidence might strike a chord on a House Price forum...

    Of course, if we have to repeat ourselves constantly, about how the crunch was built on a housing bubble, how unemployment has been massively influenced by the housing downturn, how the allied trades are suffering from housing downturn, etc etc, then the forum is going to be full of a lot of repetition...


    To the point; if low IRs are supposed to stimulate the economy, why after at least 10 months of low IRs has the US contruction industry not been stimulated?

    Shouldn't it at least start to reduce the level of increases in unemployment?
    http://www.ft.com/cms/s/0/c0ab7fe6-7b4b-11dd-b839-000077b07658.html


    Answer; because there's more to it, its liquidity that is the problem. Until sufficient contraction of all economies has taken place, there can be no 'normality'.

    Its time we stopped pretending there can be.
  • Cannon_Fodder
    Cannon_Fodder Posts: 3,980 Forumite
    chucky wrote: »
    it's the interbank lending rate that you need to look at.

    until this starts moving downwards nothing changes and no liquidity in the market.

    at the moment the Treasury or Bank of England dropping interest rates isn't having a 100% effective on these rates. there a couple of more factors to do with this before they shoot downwards.[/quote]



    ...looking at the US graph earlier, in ten months their interbank rate has failed to catch up with the Central Bank rate. As you say its liquidity, that's the real problem.

    ...would it be possible for the "couple more factors" to be employed without consigning those on Fixed Incomes to even greater hardship than has been cause by inflation, by potentially halving their income from savings?
  • chucky
    chucky Posts: 15,170 Forumite
    10,000 Posts Combo Breaker
    Cannon_Fodder wrote: »
    chucky wrote: »
    it's the interbank lending rate that you need to look at.

    until this starts moving downwards nothing changes and no liquidity in the market.

    at the moment the Treasury or Bank of England dropping interest rates isn't having a 100% effective on these rates. there a couple of more factors to do with this before they shoot downwards.[/quote]



    ...looking at the US graph earlier, in ten months their interbank rate has failed to catch up with the Central Bank rate. As you say its liquidity, that's the real problem.

    ...would it be possible for the "couple more factors" to be employed without consigning those on Fixed Incomes to even greater hardship than has been cause by inflation, by potentially halving their income from savings?

    the bank availability of funds is key - most do have cash or fnds but are scared to risk it or lend in the event they get caught out.

    the banks are also worried that this cash may be needed for other off balance stuff they haven't "declared" to the treasury or BofE

    tranches and how tranches are traded haven't been discussed yet. they're a biggie i think.
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