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Debate House Prices
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FED cuts by 0.5%
Comments
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setmefree2 wrote: »I'm not trying to express an opinion here, I'm trying to understand his/her's. I just don't get it? Everything around me says deflation - HPs are falling, stock markets, the cost of cars, everything - where is the inflation?
I know he will not like it but, increasing interest rates will further reduce house prices, meaning his cash pile will in theory buy a bigger house. There'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
Love your source of data :rotfl: :rotfl: :rotfl: :rotfl:
How come these charts always start and finish at opportune dates? I am not saying they are fibbing but I would like to see a wider timeframe, and more up to date.
Their graph was sourced from Bank of England data and it's just the first place I found on a search. The data originally came to my attention from several mainstream newspaper articles a month or two back, but I can't seem to easily find them.
The fact is that as recently as 2000/2001, banks were mostly lending from their reserves. The huge increase in credit availability seems to have come from them going to the wholesale money markets, which were increasingly driven by 'new financial instruments' including securitization, and that's where the credit boom - and the resulting bust - has come from.
If the government think that they can somehow fix things by encouraging 2007 levels of credit - as they apparently do based on their statements - then they are barking up completely the wrong tree. Much of the 'new financial instruments' are based on crock of crap assumptions of never-ending growth and grossly overstated credit ratings.--
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.0 -
I know he will not like it but, increasing interest rates will further reduce house prices, meaning his cash pile will in theory buy a bigger house. There
And how many tracker mortgages did you say you have?--
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.0 -
setmefree2 wrote: »But do you not think that the massive decrease in money supply from the collapse of the banking system (the fact that they are no longer lending) swamps a half percent cut in BOE base rate and the bringing forward of some public capital expenditure? Surely this deflationary pressure is far greater?
The banks are being given hundreds of billions in 'emergency liquidity', much of which will end up being printed cash. See Generalli's post regarding unsterilised bonds.
http://en.wikipedia.org/wiki/Monetization#Debt_monetization--
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.0 -
And how many tracker mortgages did you say you have?
I have one at BR + 0.95%, unfortunately (or fortunately) I only owe around 300 pounds, so not a great deal of benefit for me. Maybe I should borrow the funds back as I am entitled to, but that wouldn't be fair on other people who actually need the cash.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
The banks are being given hundreds of billions in 'emergency liquidity', much of which will end up being printed cash. See Generalli's post regarding unsterilised bonds.
http://en.wikipedia.org/wiki/Monetization#Debt_monetization
But none of this money is likely to end up in the real economy anytime soon (no matter what the government say) is it? Most of it will stay in the banking system to prop up their capital ratios/ balance sheets. In the meantime, the reality is that there is a massive decrease in money supply in the real economy surely, which has led to massive deflation (houses, stockmarket, pension funds, etc) so surely some action needs to be taken? Though I agree that we must keep an eye on sterling...0 -
The banks are being given hundreds of billions in 'emergency liquidity', much of which will end up being printed cash. See Generalli's post regarding unsterilised bonds.
http://en.wikipedia.org/wiki/Monetization#Debt_monetization
Fine, but what would be the effect on the currency if every country does it?
Like err now!'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
I have one at BR + 0.95%, unfortunately (or fortunately) I only owe around 300 pounds, so not a great deal of benefit for me. Maybe I should borrow the funds back as I am entitled to, but that wouldn't be fair on other people who actually need the cash.
If I'm understanding your obfuscated comments correctly, you are saying that you have an offset account with IR tracking the base rate then? So you do have quite a vested interest in lower base rates.....
( By the way, If you really feel that whether or not you draw upon the offset account makes one iota of difference to 'other people who need the cash' then I suggest you just settle the mortgage now and make the cash available to the 'needy' :rolleyes:)
Yes, I am sitting on top of quite a pile of cash but almost exactly half of it is not in sterling, so a weaker sterling (which is coming due to interest rates being thrown to the wind) will actually benefit me that way and in any case - house prices are only heading DOWN for the foreseeable future, cuts or no cuts.
What I do care about is seeing the economy of the country (in which I will be sinking my cash pile into buying property in) go down the pan and generally staying there for maybe a decade or longer as a result of bad decisions taken now.--
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.0 -
Fine, but what would be the effect on the currency if every country does it?
Like err now!
Not every country is doing it or to the same extent, or is likely to do it to the same extent - hence part of the reason for the FX swings.--
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.0 -
setmefree2 wrote: »But none of this money is likely to end up in the real economy anytime soon (no matter what the government say) is it? Most of it will stay in the banking system to prop up their capital ratios/ balance sheets. In the meantime, the reality is that there is a massive decrease in money supply in the real economy surely, which has led to massive deflation (houses, stockmarket, pension funds, etc) so surely some action needs to be taken? Though I agree that we must keep an eye on sterling...
Firstly, you think the extent of inflation is going to be exactly equal to that needed to counteract credit availability-led deflation?
Secondly, when you make more money out of nothing (no useful product created) you devalue existing money, irrespective of whether than money goes into refloating the banks.
It just means that we'll likely get biflation with essential stuff getting more expensive but not a lot more money around in the general population to pay for it. ie. We'll all get a lot poorer. If we plebs are 'lucky' and the general population get to see some of that nice warm freshly printed billions we may well see very strong inflation indeed and then all bets are off as to just how disastrously it will all end.--
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.0
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