When interest rates to go back to normal many more distressed sellers?

HAMISH_MCTAVISH

Graham_Devon wrote: »

The reason rates are so low is because the economy is in such a mess, something you seem hell bent on ignoring.

A low growth economy seems inevitable in a time of de-leveraging. But that's hardly the same thing as a recession.

If things continue moving gently upwards as they are now, the vast majority of people will be just fine. Those with mortgages will do very well.

May I also remind you that your precious housing market cannot carry on in a sustainable fashion when only the people who currently have houses, can afford houses.

Even those moaning about house prices will eventually see their income increase and real terms affordability get better, as is happening today. While the lack of nominal falls mean existing owners are not particularly suffering either, and mortgage holders are helped by low rates.

And of course, many more people can afford to pay for a mortgage than can get actually get a mortgage. But lending will improve given time. And in the meantime landlords will continue to do very well indeed.

I'm not saying all is rosy, but all things considered, most people are doing surprisingly well.

TedButler

HAMISH_MCTAVISH wrote: »

Even those moaning about house prices will eventually see their income increase and real terms affordability get better, as is happening today.

And of course, many more people can afford to pay for a mortgage than can get actually get a mortgage. But lending will improve given time. And in the meantime landlords will continue to do very well indeed.

I'm not saying all is rosy, but all things considered, most people are doing surprisingly well.

"Real term affordability get better" Yes you are right that will happen as house prices continue to fall in real terms :rotfl:

"Lending will improve given time" What are you on about? Easy credit is still here compared to what it will be like to get credit in a few years when the !!!!!! starts to really hit the fan.

Graham_Devon

HAMISH_MCTAVISH wrote: »

A low growth economy seems inevitable in a time of de-leveraging. But that's hardly the same thing as a recession.

If things continue moving gently upwards as they are now, the vast majority of people will be just fine. Those with mortgages will do very well.

Even those moaning about house prices will eventually see their income increase and real terms affordability get better, as is happening today. While the lack of nominal falls mean existing owners are not particularly suffering either, and mortgage holders are helped by low rates.

And of course, many more people can afford to pay for a mortgage than can get actually get a mortgage. But lending will improve given time. And in the meantime landlords will continue to do very well indeed.

I'm not saying all is rosy, but all things considered, most people are doing surprisingly well.

The ignorance in your arguments is starting to bore.

On one hand, you create threads telling us just how much rent is going up by. In the next thread, to defend your housing position, you put forward the notion that for those who haven't yet bought, incomes will increase and real terms affordability will get better. In the next thread, people will be paying down debts with these higher incomes, while their rents go up.

So which is it? It can't be all three. You can't expect rents to rise and also expect incomes to rise sufficiently to see house prices come down and also expect people to pay down debt, and also expect people to spend to provide growth. It's simply impossible.

In another thread, you state landlords will buy up the houses as yields are so good. In this it's back to people being able to afford due to the above reason.

You are right in one respect. Those that made the most from the boom, now make the most from the bust. They were in the best position in the lead up to the crash and are in the best position now.

But gloating about the above, which you do on a regular basis, is, in my view, somewhat distasteful.

I'll say again. The market needs to be liquid to function. You are cheering on illiquidity. You are cheering on one set of people who were able to borrow easily, now holding all the cards once again, as they are able to service their debts at the expense of others. It's fine having highly prices assets, but when the only ones who can buy those assets off you when you sell are other people with highly prices assets, something has gone wrong, and something is going to need to change.

HAMISH_MCTAVISH

TedButler wrote: »

Hamish will not like what Odey is saying, 7% and that is not a ceiling.
.

Some random attention seeker from the internet, or the BOE, Morgan Stanley, and a selection of economists......

Hmmm, tough call.

Both Morgan Stanley analysts and the BoE have stated they believe the new neutral level for base rates is a lot closer to 2.5% than the 5.5% or so that was the case for the last decade.

And a lot of smart people agree.....

Douglas McWilliams, CEBR
I’d be surprised to see rates even as high as 3pc in 5 years time

Alan Clarke, UK Economist, BNP Paribas
Further ahead, the neutral level of interest rates has probably fallen by at least a percentage point, so the peak in rates will probably be only around 4pc or so but that is some way off.

Roger Bootle, Capital Economics
Interest Rates will stay below 1% for the next five years.

Danny Blanchflower, Professor of Economics, Dartmouth College
I agree with Roger Bootle that rates will have to stay at 1pc or lower for the next five years.

Peter Spencer, Professor at University of York, and Economic Advisor to Ernst & Young Item Club
I see them remaining very low over the next five years, reaching 3pc by 2015

Stephen Lewis, Monument Securities
Over the next five years, Bank Rate is unlikely to go above 3.5pc.

chucknorris

TedButler wrote: »

You need a lot of nerve to stay on a tracker for the next few years. Those who fix soon can sleep well at least for the term of their fixed rate.

A lot of nerve? I wouldn't dream of switching away from my tracker mortgages, they are not so much a sliver lining or even a silver cloud, they are a silver sky.

Pimperne1

HAMISH_MCTAVISH wrote: »

Some random attention seeker from the internet, or the BOE, Morgan Stanley, and a selection of economists......

Hmmm, tough call.

Both Morgan Stanley analysts and the BoE have stated they believe the new neutral level for base rates is a lot closer to 2.5% than the 5.5% or so that was the case for the last decade.

And a lot of smart people agree.....

Douglas McWilliams, CEBR
I’d be surprised to see rates even as high as 3pc in 5 years time

Alan Clarke, UK Economist, BNP Paribas
Further ahead, the neutral level of interest rates has probably fallen by at least a percentage point, so the peak in rates will probably be only around 4pc or so but that is some way off.

Roger Bootle, Capital Economics
Interest Rates will stay below 1% for the next five years.

Danny Blanchflower, Professor of Economics, Dartmouth College
I agree with Roger Bootle that rates will have to stay at 1pc or lower for the next five years.

Peter Spencer, Professor at University of York, and Economic Advisor to Ernst & Young Item Club
I see them remaining very low over the next five years, reaching 3pc by 2015

Stephen Lewis, Monument Securities
Over the next five years, Bank Rate is unlikely to go above 3.5pc.

Has Killer Bunny made a prediction though?

julieq

Graham_Devon wrote: »

The ignorance in your arguments is starting to bore.

On one hand, you create threads telling us just how much rent is going up by. In the next thread, to defend your housing position, you put forward the notion that for those who haven't yet bought, incomes will increase and real terms affordability will get better. In the next thread, people will be paying down debts with these higher incomes, while their rents go up.

So which is it? It can't be all three. You can't expect rents to rise and also expect incomes to rise sufficiently to see house prices come down and also expect people to pay down debt, and also expect people to spend to provide growth. It's simply impossible.

Yes you can have all three.

Divide them up and you can see why. You have a group with low net debts who are renting. You have a group of people moving from renting to ownership. And you have a group who already own and have highish net debt.

The first group are a small proportion of the total. Of those people some will never buy anyway, and the group that will are those with higher net incomes so that they have enough cash above rent to save a deposit, i.e. the proportionally better off.

They then become the second group. They will see increasing affordability (more for their money) as stagnation continues.

And the third group (with high net debt) have seen mortgage rates fall and will therefore be able to pay down debt.

This isn't hypothesis, this is what is actually happening. The only group who is screwed is those renting at the bottom, because they're getting squeezed and have no way out. This group will become proportionately bigger unless more homes are built.

Where does the money for growth come from? Well spending it on a house recirculates it, it becomes available to spend - it is not destroyed because someone is paying a mortgage with it, or it is going in tax, it's just moved somewhere else. Ironically the worst outcome is saving money (for example towards a deposit), because it's completely out of the game then. This is the so called "thrift paradox". Interestingly though there are many people saving deposits, and this cash is going to hit the economy and the housing market before very long. Which will be a WHOOMPH moment.

I think you have to be very careful calling someone ignorant when you've only a very shaky understanding of basics and very poor analytical skills. Just a thought.

Flight2quality

MikeJLewis wrote: »

So the property bulls are admitting that parts of the UK are crashing, but the average is not?

Its the average house price that is what's important to understand what is happening to the housing market.

London is still propped up by the 2012 Games, after that next year demand will go down. The average house price for the UK will continue falling for years yet we are in a bear market.

wotsthat

Flight2quality wrote: »

London is still propped up by the 2012 Games, after that next year demand will go down. The average house price for the UK will continue falling for years yet we are in a bear market.

Nice to see you Flight. Not seen a silver sockie around these parts for a while - how come?

Flight2quality

wotsthat wrote: »

Nice to see you Flight. Not seen a silver sockie around these parts for a while - how come?

All been to busy changing our fiat currency into real money gold and silver bullion in this lovely big price suppression