Interest rates

msfender

A few observations about 5 rate rises in 12 months.

I was talking to an estate agent the other day who was expressing his dismay at the recent rate rise and explained that the current picture of the housing market is utterly skewed by London and Northern Ireland. The inflation seen in these places (due respectively to overseas investment and the peace process) is creating a completely false national picture of the property market which is not translated to the provinces and the booms seen in these places will not be touched by interest rate rises.

When a rate rise takes 6 months to have an effect on the economy, why 5 in 12 months?

And lastly, is raising rates really going to stop us spending so much on the high street when there is no shortage of 0% purchase credit cards?

PROFESSIONAL_LANDLORD

why 5 in 12 months?

Maybe the BOE are a bit !!!!!! with people like me ???


Can't have these upstarts making all that dosh! GET EM

ginger_nuts

house prices in Northern Ireland had been stagnant for years .From 2005 house prices in Northern Ireland have doubled ,but now they are slowing down . The days off getting £20,000 or £30,000 over the asking price have gone . Some vendors are dropping the asking price by £20,000 and are using multiple EA .

$$$_12

msfender wrote: »

When a rate rise takes 6 months to have an effect on the economy, why 5 in 12 months?

And lastly, is raising rates really going to stop us spending so much on the high street when there is no shortage of 0% purchase credit cards?

The Bank of England claim to set rates based on what will happen to inflation in two years time. That's why they decided to cut in August 2005 - they obviously believed that inflation wouldn't be over 2% (their target) by August 2007 :rotfl:. Or did they? :cool:

Increasing rates makes it more expensive to borrow money - so expect to see some drying up of 0% offers - eg less of them or only available to the lowest risk borrowers who don't tart.

msfender

Have to say I don't see much evidence of a drying up of 0% offers and wonder if we are about to see a price war begin with Capital One having a 1.7% fee for balance transfers.

ad44downey

msfender wrote: »

A few observations about 5 rate rises in 12 months.

I was talking to an estate agent the other day who was expressing his dismay at the recent rate rise and explained that the current picture of the housing market is utterly skewed by London and Northern Ireland. The inflation seen in these places (due respectively to overseas investment and the peace process) is creating a completely false national picture of the property market which is not translated to the provinces and the booms seen in these places will not be touched by interest rate rises.

When a rate rise takes 6 months to have an effect on the economy, why 5 in 12 months?

And lastly, is raising rates really going to stop us spending so much on the high street when there is no shortage of 0% purchase credit cards?

We should have had interest rates at about 10% years and years ago. And kept them there. This would have stopped house prices trebling in the first place which I can't see is good for anyone except fillthy Estate Agents.

Jonbvn

ad44downey wrote: »

We should have had interest rates at about 10% years and years ago. And kept them there. This would have stopped house prices trebling in the first place which I can't see is good for anyone except fillthy Estate Agents.

And the UK would have been a third world country by now! IR are not set solely considering HPI.

iamconfusedagain

Setting rates involves more than just the housing market. House prices are just a symtom of a much bigger mess. There are a lot of infationary pressures set to feed through and the last thing this country need is an inflationary spiral. The only thing keeping the figures sensible is the deflation we import from places like China.

The rates will stop people spending on credit, as credit will become more expensive and less freely available, the banks are not our friends and will not give us cheap money when it does not suit them.

BTman

Too little, too late IMO. Now they're playing catch up...

msfender

But, iamconfusedagain, interest rates have been rising for quite some time now with the prospect of more rises to come and I've just counted 38 0% purchase cards on moneysupermarket.

iamconfusedagain

Rates have come from a very low level, they are still low. While incentives will always be there to hook people, overall borrowing costs will rise and more people will find it difficult to get credit. MEW will be a lot less attractive source of spending money for people if their perceived wealth through equity stops rising (or starts falling). This will all be a gradual thing but if rates level out at more than 6% and stay there, which I think is likely retail will slow considerably.