Have BoE Lost All Credibility Over IRs?

Thrugelmir

Heyman wrote: »

The sheep can bleat as loudly as they like - fact is, rates will stay more or less where they are now until at least the end of this year.

The only thing a rise will do now is to send a loud and clear message that the MPC is very easily swayed by media and market pressure.

The shadow MPC voted for a rise last month (up .5%) . An indication that views are changing.

ILW

HAMISH_MCTAVISH wrote: »

Why?

Once again I ask you to explain the conditions under which you think a rise to 5% in a decade is a likely scenario.

If you can't, then there is no point continuing this discussion.

On a similar line to the chances of my house burning down in the next 10 years are probably about 10,000 to one or less, but I would still insure for the possibility.

sabretoothtigger

BOE is in line with Fed policy so in many minds they are very credible I think.

Graham_Devon

HAMISH_MCTAVISH wrote: »

If I was 25 and starting out in life I'd know full well that the sticker price of the house was the least important component of total cost.

I'd want interest rates to stay as low as possible for as long as possible, as this will have a far bigger impact on the total cost I pay than the sticker price of the house itself.

Given the choice, the young should be praying for peak prices and base rates of 2%, rather than 20% falls and base rates of 5%....

LOL

Yer, so, the banks are just going to give you more cash, so you can afford the higher ticket price.

I can see that convo with the bank manager and your justification for wanting more cash going well!

AD9898_2

HAMISH_MCTAVISH wrote: »

If I was 25 and starting out in life I'd know full well that the sticker price of the house was the least important component of total cost.

I'd want interest rates to stay as low as possible for as long as possible, as this will have a far bigger impact on the total cost I pay than the sticker price of the house itself.

Given the choice, the young should be praying for peak prices and base rates of 2%, rather than 20% falls and base rates of 5%....

Well I thanked you for your answer but still find it incredible that the actual cost of an item seems not to matter, only the cheapness of the credit required to buy.

Personally I would like to see the item as cheap as possible so that I could minimise the amount of credit required to buy it, after all the price isn't going to change once you've bought but the variable credit rate over 25 years will change as will many peoples circumstances.

Percy1983

HAMISH_MCTAVISH wrote: »

If I was 25 and starting out in life I'd know full well that the sticker price of the house was the least important component of total cost.

I'd want interest rates to stay as low as possible for as long as possible, as this will have a far bigger impact on the total cost I pay than the sticker price of the house itself.

Given the choice, the young should be praying for peak prices and base rates of 2%, rather than 20% falls and base rates of 5%....

I can see your logic but I would rather the other way around.

I can pay an over inflated with interest rates that can only go up,

or

I can a lot less and be left with interest rates that can only go down.

FTBFun

AD9898 wrote: »

Well I thanked you for your answer but still find it incredible that the actual cost of an item seems not to matter, only the cheapness of the credit required to buy.

Personally I would like to see the item as cheap as possible so that I could minimise the amount of credit required to buy it, after all the price isn't going to change once you've bought but the variable credit rate over 25 years will change as will many peoples circumstances.

There's a way to make this particular item cheaper - its to build more of it.

But hey ho, supply and demand is irrelevant to house prices isn't it?

Percy1983

FTBFun wrote: »

There's a way to make this particular item cheaper - its to build more of it.

But hey ho, supply and demand is irrelevant to house prices isn't it?

But when demand has been pushed higher than it should be by lax lending is it relevant?

AD9898_2

FTBFun wrote: »

There's a way to make this particular item cheaper - its to build more of it.

But hey ho, supply and demand is irrelevant to house prices isn't it?

Pretty irrelevant yes, when large amounts of credit that is no longer available is required to buy. Then it becomes supply and 'desire'. The proof of this is the continuing record low approvals, despite the so called 'demand' you talk of.

HAMISH_MCTAVISH

Percy1983 wrote: »

But when demand has been pushed higher than it should be by lax lending is it relevant?

Need for housing has not been increased by "lax lending", however an increase in lending enabled millions to buy that would otherwise have been stuck enriching their landlord for life.

Do you suggest creating artificial barriers to entry by rationing mortgages is somehow better?

And for the record, there was very little "lax lending" in the UK even in 2007. At peak, the average LTV was a respectable 89% and the average LTI never crossed 3.5 times income for FTB's.