BoE to hold rates steady forever despite lone rate rise call

phil_b_2

chucknorris wrote: »

Seconded! you can keep the recovery if rates can stay at 0.5%.

Amen to that. At least until I remortgage anyway :A

HAMISH_MCTAVISH

chucky wrote: »

there doesn't have to be a recovery

It's actually an interesting concept, and I've seen it discussed elsewhere.

What if the current situation becomes semi-permanent.....

Low housing transactions continue indefinitely as people stay in a home for 15-20 years instead of flipping every 5-7 years.

Unemployment stays in the 6% to 8% range for a decade, instead of 4% to 6% as has been the norm, restraining wage growth.

Deflation is fought off with occasional bouts of QE, and base rates stay sub-1% for, well not quite forever, but for 5 years or more.

Economic growth remains very low, but doesn't double dip.

Lending remains constrained, with big deposit requirements.

House prices stagnate, up a bit some years, down a bit in others, but rise more or less with inflation, supported by low transactions, low supply, and low base rates....... FTB's remain frozen out unless they've rich parents or a good income, as is the case now.

Population keeps growing, housebuilding stays at current record lows. (and population would grow even if net migration was zero)

It would be unusual, and it's not the textbook pattern for after a recession, but the way things are going, it almost wouldn't surprise me........

And if it did happen, everybody's assumptions, bear and bull alike, would have to go right out the window.

chucknorris

HAMISH_MCTAVISH wrote: »

It's actually an interesting concept, and I've seen it discussed elsewhere.

What if the current situation becomes semi-permanent.....

Low housing transactions continue indefinitely as people stay in a home for 15-20 years instead of flipping every 5-7 years.

Unemployment stays in the 6% to 8% range for a decade, instead of 4% to 6% as has been the norm, restraining wage growth.

Deflation is fought off with occasional bouts of QE, and base rates stay sub-1% for, well not quite forever, but for 5 years or more.

Economic growth remains very low, but doesn't double dip.

Lending remains constrained, with big deposit requirements.

House prices stagnate, up a bit some years, down a bit in others, but rise more or less with inflation, supported by low transactions, low supply, and low base rates....... FTB's remain frozen out unless they've rich parents or a good income, as is the case now.

Population keeps growing, housebuilding stays at current record lows. (and population would grow even if net migration was zero)

The way things are going, it almost wouldn't surprise me........

That would be paradise to me

HAMISH_MCTAVISH

chucknorris wrote: »

That would be paradise to me

It would be hell on earth for the crashaholics, they'd die of boredom. Worse still for a generation of FTB's frozen out by both prices and lenders.

Not great for those looking for straight capital gains. But interest costs would remain ultra low so they'd at least benefit there, and that could be considerable.

It'd be pretty good for landlords with rental income..... And existing owners on capped SVR's and trackers.

chucky

there doesn't have to be a recovery

HAMISH_MCTAVISH wrote: »

What if the current situation becomes semi-permanent.....

i think it's quite a possibility, just like a jobless recovery is

people will laugh and mock as much as they like but if they do... i don't think they understand the kind of situation that we're in....

chucknorris

HAMISH_MCTAVISH wrote: »

It would be hell on earth for the crashaholics, they'd die of boredom. Worse still for a generation of FTB's frozen out by both prices and lenders.

Not great for those looking for straight capital gains. But interest costs would remain ultra low so they'd at least benefit there, and that could be considerable.

It'd be pretty good for landlords with rental income..... And existing owners on capped SVR's and trackers.

Well I must admit that normally I wouldn't turm my nose up at more capital gains, but I bought the properties for income and would glady swop further capital gains for a long period of 0.5% base rate, as all of my mortgages are low margin trackers.

Hell on earth for the crasholics would just be the icing on the cake.

drc

Thanks inspector. That was funny.

Thrugelmir

ILW wrote: »

From what I can see, BoE rate seems to bear little relavence to rates being charged out there in the real world. Not sure who take any notice of it any more apart from those that still have tracker mortgages.

The BOE in a sense is allowing market forces to dictate rates now. With the general credit contraction looming there's no need to interfere. Until such time as wage inflation genuinely rears its head.

The stronger lenders such as HSBC are now aggressively cherry picking the best mortgage borrowers. Their recent slash of product fees is making headwaves. Though at which other lenders expense. As this leaves some lenders with decidedly poorer quality loan books. Makes you wonder if the number of main lenders will contract further. Particularly if some fail the EU stress banking tests.