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

shortchanged_2

PaulF81 wrote: »

Wage inflation? Ha ha ha! Where is that going to come from? Have you seen what we are competing against in China? Wages have a long way to fall before they go up and the government know it.

You're thinking short term again. Yes there isn't much prospect of wage inflation in the next 2 or 3 years but after that when the economy may well start to improve, who knows.

I can tell you one thing though that workers won't put up with feeble pay rises if they know the economy is strengthening and growing and then the BoE will have no option to start increasing interest rates to 'try' to prevent the economy from overheating.

PaulF81

If I was receiving a large pay rise, why would I care about a few extra % on my tracker? Its not going to cause mass default, because if it did, it would threaten the banks perilous balance sheets. Look, I fully agree people are overleveraged, but I dont really care. The minute Mervyn King threw Moral Hazard to the wind, it was time to buy. All I did was jump on the bandwaggon before my substantial savings were eaten away by inflation.

I am also betting that CPI falls below 3% in the next quarter.

Flight2quality

PaulF81 wrote: »

If I was receiving a large pay rise, why would I care about a few extra % on my tracker? Its not going to cause mass default, because if it did, it would threaten the banks perilous balance sheets. Look, I fully agree people are overleveraged, but I dont really care. The minute Mervyn King threw Moral Hazard to the wind, it was time to buy. All I did was jump on the bandwaggon before my substantial savings were eaten away by inflation.

I am also betting that CPI falls below 3% in the next quarter.

You should care about a few extra % on your tracker because at the same time your wages will be falling. What are you talking about pay rise? Wages are going to be falling for years yet as the crisis worsens.

Thrugelmir

PaulF81 wrote: »

But does anyone really expect 4% rates in the next decade? I can pay up to BOEBR up to 9% by the way. It would be a pain, but we could just manage. The balance of probabilities is we are part way through a lost decade, and lost decades are characterised not by rates going through the roof.

Very quietly borrowing rates are edging upwards. So while those locked into low cost rates for life are enjoying their windfall. There's a different situation developing in the real world. Markets are determining interest rates not central Banks. May take a decade for the situation to normalise. So the future may be very different to today.

PaulF81

Flight2quality wrote: »

You should care about a few extra % on your tracker because at the same time your wages will be falling. What are you talking about pay rise? Wages are going to be falling for years yet as the crisis worsens.

Which is exactly why rates arent going anywhere.

Very quietly borrowing rates are edging upwards. So while those locked into low cost rates for life are enjoying their windfall. There's a different situation developing in the real world. Markets are determining interest rates not central Banks. May take a decade for the situation to normalise. So the future may be very different to today.

And how does this affect me on a lifetime tracker and 50% equity?

Thrugelmir

PaulF81 wrote: »

And how does this affect me on a lifetime tracker and 50% equity?

3 lenders have already broken their guarantees. Highly probable that others will follow.

Equity is only ever notional.

katejo

Thrugelmir wrote: »

3 lenders have already broken their guarantees. Highly probable that others will follow.

Equity is only ever notional.

Exactly which guarantee has been broken? The right to transfer a low rate tracker to a new property or something else? I also have a v. good tracker but i am paying it off a.s.a.p as we don't know what is going to happen in 2012.

Thrugelmir

katejo wrote: »

Exactly which guarantee has been broken? The right to transfer a low rate tracker to a new property or something else? I also have a v. good tracker but i am paying it off a.s.a.p as we don't know what is going to happen in 2012.

Skipton and Norwich and Peterborough building societies. Shortly to be joined by the Manchester BS. Have all broken their link to base rate guarantees.

Potentially the thin end of a big wedge.

katejo

Thrugelmir wrote: »

Skipton and Norwich and Peterborough building societies. Shortly to be joined by the Manchester BS. Have all broken their link to base rate guarantees.

Potentially the thin end of a big wedge.

Is that for new mortgages or for current base rate tracker clients?

Thrugelmir

katejo wrote: »

Is that for new mortgages or for current base rate tracker clients?

Existing mortgage holders.