Carney: No rate rises until wages rise

movilogo

House price is rising.
Wage is not rising. Even if wage rises, due to house price increase, people will have less spare cash in hand.

The trick is that house price rise is not considered for inflation calculation. If it were included, BoE would have forced to hike IR by now.

We all know govt. does not want house price to fall. Don't we?

BTW, crash does not mean houses will be available as buy one get one free. Even a 5% downfall can be considered as crash as this will trigger the market sentiment for even larger fall eventually.

Bantex_2

MFW_ASAP wrote: »

Oh hey shortchanged, still using this additional username?

To answer your question, I don't think there will be, but the 'crashers' now seem to be hanging all their hopes on interest rate rises crashing the market. Quite why the government and BoE will spend so much time and effort in preventing this occurrence during the recession to then cause it to happen during the recovery is quite beyond me, but then if the crashers were capable of logical thought they wouldn't be in the financial mess they are in - they would simply buy a home and get on with their lives like everyone else.

Sort of contradicting yourself, in your earlier post you stated one of the reasons for not raising rates is that "Carney would not want a wave of reposessions). Make up your mind.

IveSeenTheLight

Graham_Devon wrote: »

And when wages rise, we'll have another reason as to why interest rates won't rise until X happens.

Is this the opposite to reasons why a Crash will happen?

Whenever the "next crash" scenario was quashed, there was always another straw clutched at.

for a long time, the interest rate rises have been cited as the "next crash" scenario, however that tree doesn;t seem to bare any fruit.

wotsthat

Bantex wrote: »

Sort of contradicting yourself, in your earlier post you stated one of the reasons for not raising rates is that "Carney would not want a wave of reposessions). Make up your mind.

This is actually quite simple.

Most sensible people know that

(a) the current crop of mortgage holders aren't in the dire economic straights portrayed by rubbish journalists
(b) increasing rates will put pressure on households but most will be able to adjust (but there will be casualties)
(c) the BoE won't raise rates to a level that will cause a rout among mortgage holders

the crasher HOPES
(a) that current mortgage holders are indebted and frightened
(b) that just a small increase in rates will tip them over the edge
(c) that the BoE will raise rates anyway

I'm ever grateful to the crashaholics for helping to drive the media message that us mortgage holders are a gnat's whisker from ruin - it keeps my mortgage rate down - thanks

MFW_ASAP

Bantex wrote: »

Sort of contradicting yourself, in your earlier post you stated one of the reasons for not raising rates is that "Carney would not want a wave of reposessions). Make up your mind.

I was of course commenting on what was on the Crashers minds, not mine.

I can understand your confusion, there isn't much logic to your 'The BoE must raise rates to cause a crash' argument, shortchanged.

wymondham

Bantex wrote: »

Are their really loads of mortgage payers out there who have commited to levels of borrowing that they can only service with rates at virtually zero?

Yes. This has been Government policy to promote this form of money management! They are even funding TV adverts now to push it further....

wotsthat

wymondham wrote: »

Yes. This has been Government policy to promote this form of money management! They are even funding TV adverts now to push it further....

A key fact from the Halifax...

The relatively low level of mortgage payments in relation to income is supporting housing demand. Typical mortgage payments for a new borrower - both first-time buyers and homemovers – at the long-term average loan to value ratio, accounted for 27% of disposable earnings in 2013 Quarter 2; its lowest proportion since 1999 Quarter 2 and comfortably below the average of 36% over the past 30 years.

So 27% of disposable income is being spent on mortgage payments.

I've got this crazy idea that if rates rise then mortgage holders will prioritise the mortgage. Therefore the people who should be most worried are the recipients of the remaining 73% of disposable income especially those supplying non-essentials.

grizzly1911

Guess rates will not be going up for a long time using that bit of fuzzy guidance.

Presumably house inflation can only go so far before they simply will become affordable to greater and greater numbers even allowing for belt tightening, changing habits, giving up the "i" something v21 etc.

Just where is this rampant wage inflation going to come from? It won't be the public sector, it won't be rafts of NMW/LW types, those that receive benefits to top up income will simply lose benefits as pay increases.

Sub prime is what we need, we usually lag the US innovations so lets try that.

Graham_Devon

grizzly1911 wrote: »

Guess rates will not be going up for a long time using that bit of fuzzy guidance.

Presumably house inflation can only go so far before they simply will become affordable to greater and greater numbers even allowing for belt tightening, changing habits, giving up the "i" something v21 etc.

Just where is this rampant wage inflation going to come from? It won't be the public sector, it won't be rafts of NMW/LW types, those that receive benefits to top up income will simply lose benefits as pay increases.

Sub prime is what we need, we usually lag the US innovations so lets try that.

I've heard that the NHS is likely to see a 2.1% pay rise over 3 years (as in 0.7% a year).

However, they will also see a pension contribution increase. So their real wage increase is likely to be around 0.2% a year for 3 years.

Lots and lots of negotiations to go through yet though.

If this gets through, I'd expect the same sort of increase for other public sector workers. All in it together, see

Oh, apart from MPs, of course, who are now astonished that they can no longer afford to live in London

Graham_Devon

Bantex wrote: »

Sort of contradicting yourself, in your earlier post you stated one of the reasons for not raising rates is that "Carney would not want a wave of reposessions). Make up your mind.

The key point of most of the posts is to have a go at another individual. Almost always completely out of nowhere.

Whether those posts make sense, totally contradict each other, or are completely and utterly made up on the spot is of little relevance!