House market final props could soon collapse

Flight2quality

DervProf wrote: »

I`ve suggested that rates should be increased if there is a hint that he economy will allow it. I suspect, given recent history, that the BoE won't be able to resist the urge to enjoy "just one more wafer thin mint".

It does not matter if the economy will allow it, the problems with keeping interest rates too low for too long are greater than trying to kick the can down the road. Keeping rates too low for too long is just postponing the inevitable.

RenovationMan

Flight2quality wrote: »

It does not matter if the economy will allow it, the problems with keeping interest rates too low for too long are greater than trying to kick the can down the road. Keeping rates too low for too long is just postponing the inevitable.

Or indeed cancelling the inevitable if its to be believed that people are ploughing money onto their mortgages. If this is happening, it's not so much 'kicking the can down the road' as putting your foot on the can right here, right now.

I know that's what I'm doing and most of my peers. Anecdotal I know.

Thrugelmir

Flight2quality wrote: »

It does not matter if the economy will allow it, the problems with keeping interest rates too low for too long are greater than trying to kick the can down the road. Keeping rates too low for too long is just postponing the inevitable.

What's the envitable?

Heyman_2

I would think more of the case for raising interest rates if not for the unanimity shown by the MPC on the subject.

9-0 for holding rates at the last vote. This from a group of respected economists with all the information at their disposal, with at least a couple of those members being described as 'hawks' just a few months ago.

Of course it doesn't mean that they're right, but with their respective backgrounds I'm pretty sure they know more about it than I do.

People always talk about Merv, but he's merely the fella at the top of the table.

RenovationMan

Heyman wrote: »

Of course it doesn't mean that they're right, but with their respective backgrounds I'm pretty sure they know more about it than I do.

But not as much as some of the 'experts' on here, it would seem. There again, the BoE have been tasked with keeping the UK economy on an even keel and so don't have the remit of "punishing people for getting large loans" or "bringing down house prices to 'affordable' levels.

Flight2quality

RenovationMan wrote: »

But not as much as some of the 'experts' on here, it would seem.

You talking about all the property bulls who have now swapped sides and admit defeat?

Graham_Devon

wotsthat wrote: »

I'm not sure why this would be anyone's advice.

How many threads have there been advocating an increase in rates over the last couple of years from those VI's wanting to 'punish 'debt junkies' as if that's a basis for economic policy?

Thats an emotional way of putting it.

However, in April 2011, 22 high up economists were asked when rates would rise.

21 stated rates would have risen by the end of 2011. Just 1 stated interest rates would remain at 0.5%.

So the majority thought rates should be rising, hence predicting they would. And these are economists, not someone on a forum. I understand why you are going for the emotional claptrap, but really it's just nonsense.

http://www.bbc.co.uk/news/business-13187283

Many more people are now starting to talk, and somewhat plan for a japanese style lost decade or two.

robmatic

Graham_Devon wrote: »

However, in April 2011, 22 high up economists were asked when rates would rise.

21 stated rates would have risen by the end of 2011. Just 1 stated interest rates would remain at 0.5%.

And since then we've had pretty weak economic data and apparently some sort of crisis in the Eurozone?

HAMISH_MCTAVISH

Graham_Devon wrote: »

in April 2011, 22 high up economists were asked when rates would rise.

21 stated rates would have risen by the end of 2011. Just 1 stated interest rates would remain at 0.5%..

And the even higher up economists on the MPC disagreed, and it turns out they were right.:)

RenovationMan

Flight2quality wrote: »

You talking about all the property bulls who have now swapped sides and admit defeat?

Um. No. Though out of interest, who are these people?