BBC's Evan Davis: IRs could hit 6%

meanmachine_2

This from the 10 o'clock news.

I love Evan (and his rumoured Prince Albert). Smart bloke who recognises the absolute lunacy of property inflation.

Anyway, he mentioned there was "talk in the city" of IRs hitting 6% next year.

Don't buy it myself - not if the US housing slump brings about a global slowdown - but we'll see.
A couple of my mates would be in serious trub if that were to happen.

rsykes2000

Completely off-topic, but apparently one nickname for Evan is 'silvertits' due to nipple piercings...

Milarky

Apparently he's also gay!

http://en.wikipedia.org/wiki/Evan_Davis_(journalist)

ReportInvestor

I don't care whether he's got rings, diamonds or nothing on his chest as long as he's wrong about interest rates.

Guy_Montag

The bit I liked was him saying that this time last year people were thinking 5% might be the peak; now people are thinking 6% may be the peak.

With a bit of luck next year people will be thinking 7% may be the peak.

lisyloo

as long as he's wrong about interest rates

What he apparently said was that there was talking in the city of interest rates of 6%.
I believe he is right in saying there is talk.
I don't believe he said that rates will be 6%.

My understanding is that 5.25% is the concensus view. 5.5% is certainly possible with 6% being the upper end of forecasts.
Saying that it's at the upper end of the range of possibilities is not the same as saying rates WILL be 6%.

Guy_Montag

lisyloo wrote:

What he apparently said was that there was talking in the city of interest rates of 6%.
I believe he is right in saying there is talk.
I don't believe he said that rates will be 6%.

My understanding is that 5.25% is the concensus view. 5.5% is certainly possible with 6% being the upper end of forecasts.
Saying that it's at the upper end of the range of possibilities is not the same as saying rates WILL be 6%.

What time frame do you put on this, it's rather important.

For example in my lifetime (assuming I live for around 40 more years), I expect to see IRs as high as 12% again & as low as 3%. Next year, I expect to see IRs as high as 6% & as low as 5%. Next year, between 7% & 5%. By the following year my crystal ball starts to get a bit cloudy? Somewhere between 9% & 4%

undercoat11

I am keeping my fingers crossed for high interest rates, but I am being selfish. I hope for rates to go high enough for some of the BTL people to get frightened and start selling. That might then help some of our young people buy their first home with a 2.5 income multiple, enabling them to start their families without stress and worry about money.

redmandarin

Milarky wrote:

Apparently he's also gay!

http://en.wikipedia.org/wiki/Evan_Davis_(journalist)

Thanks Milarky, I like Evan too and I was just about to ask what a Prince Albert was - then I read the link! :eek: Eeewwww!!! I could've done without the photo though - its put me off my lunch! :rotfl:

undercoat11

Ooh that is truly disgusting. I shall think of him in a different light now.

Milarky

Surely the BOE has a strategy of raising rates by stealth over a number of 'mini-cycles' (eg 2 years each) so that markets and borrowers don't take fright. The last cycle took us from about 3.75% to 4.75% - with a 'retrace' of one 0.25% cut in each case (i.e 3.75% was cut to 3.5% for 3 months - which marked the bottom in 2003 - and 4.75% was cut to 4.5% - for a whole year! - before moving back to 4.75%, and the commencement of another cycle. With many fewer credentials than 'city-talkers' therefore, I would hazard that 4.75% to 5.75% is the next 'likely' cycle (possibly to 5.5% instead - but in that case there would still have to be a 'last' rise to 5.75% - followed by a cut to 5.5% after four to six months to mark the start of the next period of cuts. Here's how it might look...

3.75 - 4.75 2003 to 2004
4.75 pause 2004 to 2005
4.5 mini dip 2005 to 2006

4.75 - 5.5? 2006 to 2007
5.75 pause late 2007?
5.5 - 5.0? 2008?
4.75 mini dip early 2009? [Election out of the way...]
5.0 - 6.0 2010