Ernst And Young Recommend Lower Interest Rates

ILW

HAMISH_MCTAVISH wrote: »

Don't be daft.

Not that daft going from many of your past posts, which seem to say that a drop in house prices will destroy the whole economy.

Graham_Devon

HAMISH_MCTAVISH wrote: »

1. The long term average is not 3.5 times salary. The long term average is 4 times male (mean) full time salary.

2. The current average house price is 4.4 times male (mean) full time salary, so at most 10% above historical norms. And given the extreme supply shortage and rise of dual income households over the last 40 years, today's levels are likely as cheap as it'll get for the next few decades.

4. The long term average includes the three decades of the freakishly highest rates in the BOE's 350 year + history. As there has been a structural shift towards more normal mortgage rates of around 5%, then 15% rates (when 3.5 times income made sense) are unlikely to be seen again in our lifetime.

5. The percentage of income a new buyer pays today towards a mortgage, even a mortgage at 5% rather than the 3.5% average, is far less than it was when houses were cheaper but rates were higher, and is well below the long term average.

You appear to think you are scanning the pick and mix isles in your crazy aberdeen version of woolworths.

I love it.

As soon as the Halifax figures come out, your there "they admit themselves ther metholodgy is wrong...take the figures with a pinch of salt, nationwide it more accurate".

Yet here you are, using the Halifax figures to make all your arguments about affordability!

Why? Well you don't like the Halifax figures because they have lower average house prices. BUT, you DO like the affordability figures, as lower average house prices = higher affordability! Woohoo, Hamish can put together a few mirrors and make an argument!!

Make your mind up will you!? Either use Halifax figures, and don't slam the same figures you use, or don't use them at all.

Nationwide is your favourite, and the most "accurate" apparently....so why not use the most accurate for your own calculations? We all know the answer. Simply doesn't suit your argument.

Your beloved Nationwide, which you appear to have forgotten about for affordability arguments, suggests house prices are currently 5.2x average wage.

ukcarper

the_flying_pig wrote: »

No, no, no, no no.

Your point 1 - a multiple of 4 is not a "long term" average. It's the post 1980 average.


Second half of your point 2 - pure speculation/ramping.

Your point 3 - actually one of your better efforts.

Your point 4 - see 1.

Your point 5 - it's true that low rates matter but please don't chuck around this "long term average" rubbish.

To be fair the last boom has made the long term average higher but the figure used has always been full time male earnings.

DervProf

In my opinion, by cutting and holding the base rate at 0.5% for so long, they have used up most of their ammo, and missed the target (and you could say that the target is 2% inflation). I think I heard Andrew Sentence on the news yesterday, saying that the BoE missed an opportunity to increase rates slightly about a year ago. I was quite suprised to hear someone daring to mention that a rate rise may have been a good idea. Another chap on Radio 5 was saying similar things. He mentioned that the cut in rates hasn't produced the desired effect, and that it's arguable about how much QE and low interest rates are actually helping the economy.

We all know that a fair bit of how well the economy is doing will be based on sentiment and people's perception on how things will be in the near future. No doubt a cut in rates is as much about a confidence boost, as it is about actual £s in pockets. With the economy flat lining, what we could really do with now is an interest rate cut, but the BoE has almost nowhere to go with rates almost at 0%. Of course, an increase in base rate might not be a bad idea to try and curb inflation slightly, but that option is not very appealing, given the fragile state of the economy.

So it's a really tricky situation, and one that I'm not suprised that we are in, given the BoE's reluctance to increase rates to slow down the boom and eagerness to drastically cut rates to keep the boom going.

Mr_Mumble

An intriguing theory as to why we won't see a cut in interest rates from Henderson's chief economist:

A cut in Bank rate from 0.5% to 0.25%, as recently suggested by the Ernst & Young Item Club, could intensify the squeeze [in banks' interest margins], with funding pressures making it difficult for banks to lower deposit costs sufficiently to compensate for the reduced yield on tracker mortgages and other loans linked to official rates.

geneer

Graham_Devon wrote: »

You appear to think you are scanning the pick and mix isles in your crazy aberdeen version of woolworths.

I love it.

As soon as the Halifax figures come out, your there "they admit themselves ther metholodgy is wrong...take the figures with a pinch of salt, nationwide it more accurate".

Yet here you are, using the Halifax figures to make all your arguments about affordability!

Why? Well you don't like the Halifax figures because they have lower average house prices. BUT, you DO like the affordability figures, as lower average house prices = higher affordability! Woohoo, Hamish can put together a few mirrors and make an argument!!

Make your mind up will you!? Either use Halifax figures, and don't slam the same figures you use, or don't use them at all.

Nationwide is your favourite, and the most "accurate" apparently....so why not use the most accurate for your own calculations? We all know the answer. Simply doesn't suit your argument.

Your beloved Nationwide, which you appear to have forgotten about for affordability arguments, suggests house prices are currently 5.2x average wage.

Hamish appears to have left the building.

geneer

Pimperne1 wrote: »

This is a better site for being able to air bullish views without the threat of being banned. I would say that, to me, there is no equal to HPC for the collection of data from the various sources. Here we have the best of both worlds - being able to freely comment and being able to draw data from HPC (although the moderation policy here might benefit from toughening up - ie two strikes and you are out )

:rotfl:Where's your sig gone pimp.
How many strikes would you have left I wonder?