Get ready for rates to rocket

mewbie_2

julieq wrote: »

8 fold = 8 x or least it did when I did maths.

8 fold. 8 times. Clearly different. If you fold something it doubles. Now fold it again. Interesting fact. You cannot fold a piece of paper 8 times, even if it were big enough to cover the planet. Not possible.

But I digress. I was just trying to undermine your argument, and your reason for being here. What's the topic? Oh rates going to rocket.

Y'see Julie, the HPI was kept going by artficially low rates. Then when it all went t1ts up, the only reponse from a desperate financial community was to lower (yes lower - lol!!!) the already low rates. In the hope that "something would turn up". Well the lowest rates in history (300 years I believe - lol) have so far had no effect in preventing 20% drops.

I put it to you, and your fellow dwellers in cloud cuckoo land, that when rates go up then the only way for house prices is down. Plummet I'd call it.

Plummet and rocket - has a nice balance to it don't you think. _party_

julieq

I do think that when people focus on capital value they lose track of the subisidiary, valuable, benefit of a house, which is that you can live in it. They are unusual asset classes in that sense.

I don't think the doomsday arguments make sense. They always have to bring an equivalent idea of an asteroid strike: "interest rates have been 15% therefore there is a risk they will go to 15% again!" or "the IMF will have to step in!". There's no set of logical steps to show why any of this should be so. It's also wish fulfillment in a way, I suppose if you're spending 750-1K a month paying your landlord's mortgage on the basis you're right about your assessment of the financial situation and he's wrong, then you have a significant personal stake in wanting to be right.

That's not to say interest rates will not quadruple or increase 10 fold from a historic low point. Of course they will. Some people will be caught out by that. But it will happen over an extended period and be accompanied by a general recovery so the effects will be smoothed. If there is no general recovery then it won't happen. It's essentially self regulating.

mewbie_2

julieq wrote: »

increase 10 fold

You're just trying to annoy me now.

julieq

Mewbie, if you're going to be patronising, be right.

http://www.isis-innovation.com/news/news/bioanalab-apr05_1.html

Describes an 8 fold increase. Do the math.

House prices can and do increase when rates rise. Again, simple verifiable fact. Rates will tend to rise when there is inflation, usually the intention of the rise is to arrest the inflation to a sustainable level, not to create deflation.

JonnyBravo

mewbie wrote: »

You're just trying to annoy me now.

:rotfl:

Well according to your analogy surely things would halve, not double, in size when you "fold" it!

I obviously went to the same sort of school as julieq though and think 8 fold = 8x


Edit: Unless you're not talking about the decrease in area but more the increase in thickness.... which would seem somehow appropriate !

lostinrates

julieq wrote: »

I do think that when people focus on capital value they lose track of the subisidiary, valuable, benefit of a house, which is that you can live in it. They are unusual asset classes in that sense. .

I absolutel agree. However, I also think people overlook the tie this can be in certan property types. For example, had you bought one of the much talked about over priced new builds in a city centre: if that city centre offers less employment - including your job, and the rentlal interest is low, in comparison to your mortage: you have a problem....ou migh need to move for work, and you are tied to a property. Its a fairly low incidence I imagine, but probabky hits certain areas/rungs of the ladder harder.

Of all the normal domestic properties we have seen ever only one do I think would hav been a reall good investment while we were out of the country and for the rest of our lives regardless of the other options we have considered.

mewbie_2

julieq wrote: »

Mewbie, if you're going to be patronising, be right.

http://www.isis-innovation.com/news/news/bioanalab-apr05_1.html

Describes an 8 fold increase. Do the math.

House prices can and do increase when rates rise. Again, simple verifiable fact. Rates will tend to rise when there is inflation, usually the intention of the rise is to arrest the inflation to a sustainable level, not to create deflation.

I'm not sure patronising is the right word? Anyway I looked up eight fold and you are correct, it does mean eight times. Gosh, someone might think I was just on a wind up.

The rest of your stuff is rubbish though. Sort of cod economics for the Daily Mail set.

ad9898_3

julieq wrote: »

That's not to say interest rates will not quadruple or increase 10 fold from a historic low point. Of course they will. Some people will be caught out by that. But it will happen over an extended period and be accompanied by a general recovery so the effects will be smoothed. If there is no general recovery then it won't happen. It's essentially self regulating.

If we look at history, you may well be right, however, the government has/is borrowing huge sums of money at this time, that money will have to be paid back, Darling has based his borrowing on his own sums, which just a few weeks after the budget are hoplessly optimistic, which means more will have to be borrowed than is forecast, a trip to the IMF is by no means out of the question at his time, and if we have to go down that path, rates will indeed go up, whether the indebted in society can cope with it or not.

Even if we avoid the IMF, the cuts to public spending and tax hikes will have a very damaging effect on any kind of recovery. I think people are unaware at this time of the huge public debt that we are adding to each month, because at this time we are 'still spending borrowed money', a billion here, a billion there, however the government's credit card bill will have to be paid for at some point, it will be at that time that the situation will become clear of just how much trouble the nation is in.

Graham_Devon

julieq wrote: »

And who cares about that? In 10 years it's likely to be a much lower percentage, especially if there's the sort of inflation that would require substantial interest rate rises to control.

LOL.

Thats 10 YEARS.

Were kind of talking about now.

Why do the bulls think that if interest rates shoot up, so will wages? We are going through a period of GROWING unemployment and wage cuts.

Where the hell do you all get massive wage increases from?! It's an argument I can not, in any way, comprehend.

julieq

Why is it rubbish, Mewbie?

Explain and argue your case please. So far we've had an ad hominem based on you being wrong about what 8 fold means, and an insult based on the Daily Mail, which I don't read anyway.

I think I've argued my position clearly. You don't have to agree with it, but if you don't, set out the reasons that lead you to your conclusion and the assumptions you make to get there.