Carney states we "do need to be vigilant on house prices"

nickj_2

CLAPTON wrote: »

we don't know the circumstances but that sounds affrordable by any reasonable standards

he has no means to pay back the capital ? please explain how that is affordable

CLAPTON

nickj wrote: »

he has no means to pay back the capital ? please explain how that is affordable

firstly we were discussing the general affordability for 'ordinary' people
that is affordable for many many ordinary people


as far as this particular person is concerned then tell us his circumstances and the choices he makes

IveSeenTheLight

nickj wrote: »

we know that house prices are over valued now

That's a personal perception and not necessarily a fact.

nickj wrote: »

where are the affordable housing that "normal" people can afford , in my local town they have been building several housing developments , i don't think any of them are for sale for less than £350k , one ad in the local paper are for a stunning new delopment with prices starting at £1/2m for 2 bedrooms .and these are not london prices

To answer your question, I can relate to my own experience.

I'm building a house (single) and part of the planning application was that I had to pay a subsidy towards affordable housing.
The area earmarked that my subsidy will contribute to is 25 miles away from where I am building my home, therefore you can get situations where the affordable housing is not necessarily in the same town.

nickj wrote: »

if house prices are under control let's have an increase of interest rates and then see what happens

When interest rates increase, mortgage holders will either need to fix their mortgage else budget accordingly to pay for the housing.

We have seen 5 years since the peak where house prices are on average lower than that peak, essentially meaning people have been able to pay down their mortgage for 5 years from that peak price.
When interest rates rise, the average mortgage holder will owe less on their property from where they were able to afford at higher rates / higher mortgages.

The idea that interest rates will rise dramatically enough to affect most mortgage holders beyond the brink of affordability is unrealistic.

Carl31

IveSeenTheLight wrote: »

The idea that interest rates will rise dramatically enough to affect most mortgage holders beyond the brink of affordability is unrealistic.

I dont think anyone would want that to happen, but raising IR has more than the affect on mortgage holders, it may encourage more lending, improving business investment possibilites and therefore the economy, also give better returns to those currently saving (including those saving for a deposit on a house), making life a little easier

Loughton_Monkey

IveSeenTheLight wrote: »

........The idea that interest rates will rise dramatically enough to affect most mortgage holders beyond the brink of affordability is unrealistic.

Agreed. But I can predict that when rates do rise, we'll get an awful lot of moaning on here. Especially the absent minded ones who 'forgot' to fix.

CLAPTON

generally speaking, improved economic environment encourages companies to expand their business which often requires them to borrow to fund the expansion.

this tends to lead to wages rises and inflation so the BoE will then increase interest rates to choke off lending and cool inflation

IveSeenTheLight

Carl31 wrote: »

I dont think anyone would want that to happen, but raising IR has more than the affect on mortgage holders, it may encourage more lending, improving business investment possibilites and therefore the economy, also give better returns to those currently saving (including those saving for a deposit on a house), making life a little easier

there are two sides to the coin / scale of balance with interest rates rising.

You mention encourage more lending, but the flip side of the coin is that it costs more to borrow

You mention it give better returns to those currently saving but the flip side is that it discourages spending.

Rest assured, if the MPC thought that the economy would be better by higher interest rates, then there would have been movement to do so.

They obviously believe taking all things into perspective that holding rates low is the best thing for the economy, including businesses, savers, mortgage holders, banks etc

JohnRo

IveSeenTheLight wrote: »

They obviously believe taking all things into perspective that holding rates low is the best thing for the economy, including businesses, savers, mortgage holders, banks etc

"They're" thieving from savers and pension annuities to prop up house prices and maintain the mortgage welfare "home owners" have enjoyed through the last 5 years of financial repression.

All with the hope enough people will be greedy and gullible enough to vote for them again.

IveSeenTheLight

JohnRo wrote: »

"They're" thieving from savers and pension annuities

I don't recall any guaranteed minimum expected investment returns from any savings accounts that would warrant the comment that they are being stolen from.

As with any investment, the returns and sometimes the capital is at risk.

Loughton_Monkey

JohnRo wrote: »

"They're" thieving from savers and pension annuities to prop up house prices and maintain the mortgage welfare "home owners" have enjoyed through the last 5 years of financial repression.

All with the hope enough people will be greedy and gullible enough to vote for them again.

Leaving aside the fact that we don't vote for the Bank of England MPC, the concept of "thieving" from savers is interesting. Being a net saver, I am 'suffering' more than most, but if you perceive it as thieving, there must come a time - when base rates increase - at which point they would in fact be 'giving' us something. At what rate is this achieved? 3%, 5%, 7%.....?