Low rates are now endangering the economy

MiserlyMartin

HAMISH_MCTAVISH wrote: »

Rubbish.

If lending conditions were "normal" the 'help to buy' scheme wouldn't be needed at all.

It's only compensating for a broken and dysfunctional mortgage market, as and when that mortgage market returns to normal and starts lending properly again it can be withdrawn.

You really are deluded. Lenders know houses are 20% overvalued and see a risk of loss if lending at anything over 75% LTV. This is the reason for your 'broken mortgage market'. Thanks to the Help To Buy that lender risk is removed and transferred to taxpayers. Bingo 95% LTV is back but at no risk to banks. 2003-2006 was not "normal" but in your greed induced eyes you seem to be thinking it was.

HAMISH_MCTAVISH

MiserlyMartin wrote: »

Lenders know houses are 20% overvalued and see a risk of loss if lending at anything over 75% LTV. This is the reason for your 'broken mortgage market'. .

:rotfl:

Absolute nonsense old boy.

Lenders have used higher deposit requirements to ration funds, as the pool of creditworthy people who want to borrow has far exceeded the pool of money available to lend for the last 5 years, thanks to the credit crunch.

This situation is now easing, thanks to govt and BOE efforts to repair the dysfunctional lending markets.

It really is that simple.

chucky

MiserlyMartin wrote: »

You really are deluded. Lenders know houses are 20% overvalued and see a risk of loss if lending at anything over 75% LTV.

Overvalued compared to what?

K.Morrisy

OffGridLiving wrote: »

How would inflation get out of control if the economy hasn't recovered?

From expanding currency supplies.

N1AK

OffGridLiving wrote: »

Your scenario just opens up a further question. What would cause confidence in the currency to be shaken to such a degree that we have hyperinflation?

There is virtually no chance of the UK seeing hyperinflation in the short or medium term. However hyperinflation isn't the level it would have to reach for people to say inflation is "out of control" as you originally stated. Given that we are targeting 2% I think we'd see claims the government had lost control of it if it reached just 5% or higher, certainly by 8%.

I don't believe we'll see inflation like that, though generally people don't before it happens, but there are dozens of low likelihood scenarios that could bring it about.

CLAPTON

Whilst I rule out hyperinflation, levels over 5 % seem likely

at the moment we have virtually zero wage inflation:
however if the economy continues to grow, pressures on wages will follow.
with a long period of zero increases people will be quick to demand higher incomes and higher inflation will quickly follow.