MSE News: Nationwide: house prices continue to drop

Really2

Or you call it a repayment vehicle, something you are meant to have in place?

You would have to be a compleat numb nuts to spend the money lower rates have allowed.

Spend when it low, save when it's high seems a great idea?(not) or is it just spend spend and don't pay off a mortgage?

I have not chosen to not spend it, I chose at the time of taking out my mortgage to pay the equiverlent of a 6.5% fixed rate.

To stop increasing payments if and when rates are higher it requires overpaying when rates are lower.

All being well, I have about 11 years left now.

Anyway overpaying is spending, the bank can then use it to lend to someone else.

But like ISL lower rates does not mean I have more spare cash each month, it goes to where it has always been going, just that more of it pays the mortgage of not on interest.

Graham_Devon

RenovationMan wrote: »

I think we would agree though, that many more people have less cash than before the recession than more, which is the point I was making. Lots of people have lost their jobs, lots of people with no overtime and lots of people with zero payrises (I'm one of them). Given that the vast majority of UK citizens will be poorer once the austerity packages really kick in, especially the VAT increase, why then bring in an interest rate increase to 'stop people spending', when most people have already stopped.

This is the thinking behind my Interest Rate gamble and I just cant see a flaw in my argument.

Well I'm not really qualified enough to go into detail on this one, but interest rates can rise for other reasons. It's not just to stop people spending. Even if people were spending hardly anything, interest rates could still rise.

I'm sure someone else could explain why. I have the basic premise of understanding, but the terminology would be completely out, which would only lead to a slating

de1amo

i would say i have saved because of the low rates but my net worth has dropped--house price and sterling value --i dont live in the uk but the exchange rate has gone down-14pc since i left 4 years ago.--this must at some time feed into the uk economy in inflation--the first sign i have seen is the rise in energy costs for homeowners -

Blacklight

Graham_Devon wrote: »

Well I'm not really qualified enough to go into detail on this one, but interest rates can rise for other reasons. It's not just to stop people spending. Even if people were spending hardly anything, interest rates could still rise.

I thought the whole idea of growth relied in part on people spending. Without people consuming what others produce there is no GDP.

Why do you want rates to increase to stop people spending Graham?

Graham_Devon

Blacklight wrote: »

Why do you want rates to increase to stop people spending Graham?

Dunno why you bother. This is blatantly posted to provoke something. I've never said anything of the sort.

SteveV2

Graham_Devon wrote: »

Call it tosh if you like...



Remember, thats PER child.

Add in 'the more you earn the less tax credits you get'.

My wife used to work part time. We now have 2 children and are better off with her not working.

wend33

torontoboy45 wrote: »

the LR figure is out this morning (11am?). allowing for its lack of precision it's the only one that really matters, IMO (and even then Y-O-Y).

gen will be along shortly to remind us all about 'noise' levels.

Why would you say the LR figures lack precision? The figures used are the actual prices from actual house sales! They are sometimes delayed a little but this is due to late lodging by solicitors!!

rickbonar

RenovationMan wrote: »

rickbonar wrote: »

I think the theory goes that the higher the interest rates the less spare cash people have to spend on goods. So spend less in shops and services.
If interest rates are low then that is supposed make people spend more and if it goes too much then a market driven situation the more demand the higher the prices go... inflation..

Does anyone have any spare cash at the moment? Given that we already have an austerity package in place, with further measures to come and a VAT increase pending, do we really need to also introduce an interest rate increase?

The government is already using fiscal policy to control inflation (taxes) and so why would they also need to use monetary policy (interest rates) as well?

No people don't have spare cash at the moment. Prices are rising and there is inflation but it is more to do with the falling pound against foreign currencies and the fact people are holding on to cash as they fear their mortgages will go up in the near future and the house prices will fall further.

However the silver lining is that rampant inflation can be the house buyers best friend.

RenovationMan

Plus inflation is, paradoxically, deflationary. The higher the prices on certain goods, the greater people's reluctance to buy them. IIRC, when fuel prices went through the roof, the amount of Chelsea Tractors doing school runs went down dramatically and a lot of peeps started using their cars for necessary journeys only, which was no bad thing.