oh dear oh dear. No end in sight. 0% here we come

ginvzt

Conrad wrote: »

We need zero rate now.

Of my last 20 enquiries, only about 5 can get a mortgage! Many of those declined have above 25% deposits.
Not that zero rate will encourage lenders to lend, but we need every stop pulling out now.

If the rates drop to 0, you can forget about letting any mortgages and there will be no savers putting money in the banks and banks will have no money to lend! I think I'd better keep my money in the socks than put in the bank at 0% (they already are nearly there for some savings anyway) and risk the bank going bust.

Old_Slaphead

Conrad wrote: »

We need zero rate now.

Of my last 20 enquiries, only about 5 can get a mortgage! Many of those declined have above 25% deposits.
Not that zero rate will encourage lenders to lend, but we need every stop pulling out now.

So just remind me - exactly why do we need yet lower interest rates?


Oh, I remember, so that prudent savers can recapitalise the banks and pay off Gov't interest!

Dithering_Dad

ginvzt wrote: »

If the rates drop to 0, you can forget about letting any mortgages and there will be no savers putting money in the banks and banks will have no money to lend! I think I'd better keep my money in the socks than put in the bank at 0% (they already are nearly there for some savings anyway) and risk the bank going bust.

The majority of the money banks lend out is not connected with the amount they have under deposit. Basically they're lending you your own money, with interest (i.e. your future earnings that they take each month via your repayments). The money they lend to you is created from thin air.

Someone posted an excellent youtube vid about this (http://www.youtube.com/watch?v=vVkFb26u9g8) on Monday. I only got as far as episode 2 of 5 before I got too annoyed to continue.

This basically explains why we're in such a mess now. The banks lent out more than they had on deposit, there was a run on the banks and they didn't have enough actual cash to pay the depositors so the government stepped in to bail them out with our cash. Except that cash doesn't exist either - it's all our future taxes... and so it goes on :eek:

Kev09

socrates wrote: »

BTL Mortgages that were £1100 per month are now £300 yet the rent is still £1250 - how long do you think 'they' will allow this to go on for.

They are waiting for enough savers to jump on the 'gold' bandwagon and a few ftb's with deposits to jump in and rates will shoot up again.

Alot of BTL dudes will be on fixed deals and vairable deals as they have been buying like crazy over the past few years, so im not sure how many are coining it in! I don't know how "they" refers to but the BOE certainly do not make any money out retail lending so I can see very little incentive for them to start pushing interst rates up unless they all want the sack, inflation is "their" target.

Kev09

maninthestreet wrote: »

The problem is deflation, not inflation. Inflation is expected to be as low as 0.5% by mid-2009 if interest rates stay at 1%, well below the government target of 2%.

I was making the point, that if you are trying to stimulate inflation, leave the money supply side well alone. The only real stimulas available for the demand is interest rates and once they hit 0% then they try all the other stuff QE etc

zarazara

I supose Wheelbarrow manufacturers will do well then.

paulmx3

i cant see this fascination they have with lowering interest rates to get the economy moving,surely that will just further promote what got the country in this mess in the first place,ie people spnding money they dont have,and what i mean by that is extra money that people now have due to rates being so low,it is not sustainable and i dread to tink of the mess we will be in when rates have to go back to there more realistic 5% or so and not forgetting when rates where 15%,that would bring the fear of god into most households yet it is a real possibilty.

its going to be painfull either way so why not just be realistic about it.

Thrugelmir

socrates wrote: »

BTL Mortgages that were £1100 per month are now £300 yet the rent is still £1250 - how long do you think 'they' will allow this to go on for.

They are waiting for enough savers to jump on the 'gold' bandwagon and a few ftb's with deposits to jump in and rates will shoot up again.

Are you referring to interest only mortgages?

socrates

BoE are not even in the game - they are pawns.

How is it that one minute they are keeping things on hold or increasing and all of a sudden drop,drop,drop like mad.

They were told what to do by the powers that be.

Kev09

Conrad wrote: »

We need zero rate now.

Of my last 20 enquiries, only about 5 can get a mortgage! Many of those declined have above 25% deposits.
Not that zero rate will encourage lenders to lend, but we need every stop pulling out now.

Are you sure they are not being declined as you are too busy on these forums and not doing your work right!

only kidding!