House prices must be kept up at all costs

phil_b_2

Blacksheep1979 wrote: »

Ok so there aren't any available at that price - what do you think is going to happen to the mortgages that are available at 4-6% when the base rate comes back up to say 3-4%? You think they'll stay the same or increase? You think that makes owning a house cheaper or more expensive?

They wont rise proportionately. they certainly didnt decrease proportionately. In fact people were moaning for ages about why the mortgage rates on offer didnt factor in the full BOE rate drops.

Turnbull2000

StiflersMom wrote: »

Yep - that's the bit that got me. The old blue brick reference.

What a load of morons these HPC lot must be !!

:rotfl:

You come across as a bit of a moron yourself tbf.

ess0two

Blacksheep1979 wrote: »

Ok so there aren't any available at that price - what do you think is going to happen to the mortgages that are available at 4-6% when the base rate comes back up to say 3-4%? You think they'll stay the same or increase? You think that makes owning a house cheaper or more expensive?

I aint got a clue,but Brit keeps quoting .5% as saving many householders,when the truth is the majority are paying sub 4% at the mo.

brit1234

ess0two wrote: »

Brit,seriously where are these .5% mortgages?

I said 0.5% interest rates not mortgage rates. However there are people on 0% tracker mortgae rates but most seem to be in a range of 2%-7%, still very low.

On high borrowing a small rate increment can translate into a sizeable monthly bill. Remember people were hurting at 5% interest rates and that still is a historical low.

Blacksheep1979

phil_b wrote: »

They wont rise proportionately. they certainly didnt decrease proportionately. In fact people were moaning for ages about why the mortgage rates on offer didnt factor in the full BOE rate drops.

The reason they didn't drop as much was to do with 'sensible lending', concern over house prices dropping/negative equity and also to recoup losses previously made. Of course they'll raise the interest rate when it goes up, whilst maybe not the full 3-4% it'll easily go up a couple of percent.

HAMISH_MCTAVISH

brit1234 wrote: »

Remember people were hurting at 5% interest rates and that still is a historical low.

Errr, no they weren't. And 5% is not a historical low, it is the long term, 400 year, average.

In fact, at the peak base rates were 5.75%, and that didn't create a wave of reposession, arrears and price drops. The vast majority of people could still afford to pay at those levels.

The only reason prices fell is because the banks had their funding sources shut down almost overnight. Rates had nothing to do with it.

This caused a 70% drop in mortgage lending, and intense rationing of what little remained.

As soon as mortgage lending increased, so did prices.

There is no way rates will reach 5% again for many, many years. I wouldn't be surprised if we don't see 5% base rates within a decade. Base rates are set to control liquidity within the economy, raising rates reduces spending power, which reduces demand for goods and services, which controls inflation.

The BoE has already stated that raising rates to just 4.5% today would have the same demand destruction effects as raising rates to double digits did in the early 90's due to higher capital sums borrowed.

So we can perfectly well control inflation with rates of between 1% and 5% these days, and I'd be prepared to bet we won't see double digit base rates in my lifetime again.

chucky

brit1234 wrote: »

First time buyer affordability is also improving we are told. But this is all short term.

the average age of the FTBer is lower than it was in the 1990s...

tbf fair Brit could you not used a better source for your article - it's not the most credible site

stueyhants

So the UK can't raise rates above 5% or it will kill the country. As a country we can get away with this as rates in other countries are low at present. What happens when the rest of the world starts to raise rates beyond 5% (which they can because they aren't as leveraged as the UK) in 2-3 years time.

We either have to follow suit or lose international investment. Can we de-leverage enough in the next 2-3 years to offset this ?

chucky

stueyhants wrote: »

So the UK can't raise rates above 5% or it will kill the country. As a country we can get away with this as rates in other countries are low at present. What happens when the rest of the world starts to raise rates beyond 5% (which they can because they aren't as leveraged as the UK) in 2-3 years time.

We either have to follow suit or lose international investment. Can we de-leverage enough in the next 2-3 years to offset this ?

i don't understand. why can't we get away with it?

stueyhants

chucky wrote: »

i don't understand. why can't we get away with it?

As an international investor why would you choose UK debt at 5% when you can buy German or US for 6%