We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Stock Markets Bombing!
Comments
-
Because demand isn't the number of people that want something. Demand is the number of people willing and able to buy something at any given price. As you move up the demand curve (i.e. as prices rise) for most goods and services, houses included, people drop out of the market for 2 reasons, because they can't pay the price requested by the seller or because they won't.
If (when?) the current credit squeeze means that banks won't lend borrowers high multiples of their salaries or grant 100% mortgages then buyers will be forced out of the market because they can't bid. That is demand falling. As that happens, prices of houses will start to fall as demand falls.
Too right.
In the 'Got a pulse? Then you can get a loan!' environment of recent times, desire did really equal demand. Why? because just about anyone could get the credit to get anything they wanted. Never mind the massive pile of debt that they were building up, low interest rates and minimum payments which didn't come close to paying off the principal took care of that....
I don't see why people have allowed themselves to become brainwashed that ever-accelerating, higher house prices are good. What's good about having to borrow tens or even hundreds of thousands of pounds more to get something that many would consider essential?
You can go on about the equity in your property but what happens when you sell it - you need to buy another house which has also gone up in price massively. If you are trading up, you'll pay more to go up the property ladder. Madness.
The only homeowners who 'win' are those downsizing or moving somewhere cheaper (like out of the country). Everyone else faces a lifetime of debt paying off massive mortgages or not being able to afford to buy a house.
And people think that is a good thing? Just how stupid and gullible have the population become?--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
What's 'sadistic' about raising interest rates? They have to protect against inflation, which will absolutely screw up the whole economy for everyone.
If that hits people who have stupidly borrowed beyond their means to comfortably repay, too bad. They should have figured out that they'd have to repay their borrowings with interest and made sure that they could afford to do so with their income, allowing for a possible 1-2% rise in interest rates.
Bear in mind that rates have been at all time lows. Even 6% is actually very low by historical standards. If such a low rate is causing trouble, it's the fault of the borrower and not the central bank who has to managed the economy.
Looks like people really have become addicted to cheap and easy credit. Too bad it's all about to dry up and it's absolutely nothing to do with the central banks.
would have to agree with this; have been banging on about this myself on this forum. for too long also, prudent savers have been punished by (unnecessarily so) low rates just to prop up the housing market (as if it needed propping up) - think back to 2005 when the BofE cut rates for some bizarre reason. I have a mortgage, yes (fixed rate), but i am also a saver and we savers deserve better. would not surprise me at all if the BofE ruined it all and cut rates by November. Incompetence writ large.
BLOODBATH IN THE EVENING THEN? :shocked: OR PERHAPS THE AFTERNOON? OR THE MORNING? OH, FORGET THIS MALARKEY!
THE KILLERS :cool:
THE PUNISHER :dance: MATURE CHEDDAR ADDICT:cool:0 -
I very much doubt interest rates will rise this month - inflation sitting at 1.9% is exactly what the government and the MPC wants, and to raise rates further without allowing time to see the true impact of rises on inflation, they could actually do more damage than good.0
-
SmartMoneyConnection.com wrote: »I very much doubt interest rates will rise this month - inflation sitting at 1.9% is exactly what the government and the MPC wants, and to raise rates further without allowing time to see the true impact of rises on inflation, they could actually do more damage than good.
This graph - http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/currency/default.stm
Shows that rates won't be cut for ages. If this graph continues to fall then Inflation will rise. If we cut rates this graph will plummet and inflation will soar.
Still more chance of a raise then a cut for a while I'm afraid.0 -
free4440273 wrote: »would have to agree with this; have been banging on about this myself on this forum. for too long also, prudent savers have been punished by (unnecessarily so) low rates just to prop up the housing market (as if it needed propping up) - think back to 2005 when the BofE cut rates for some bizarre reason. I have a mortgage, yes (fixed rate), but i am also a saver and we savers deserve better. would not surprise me at all if the BofE ruined it all and cut rates by November. Incompetence writ large.
Absolutely - they cut rates in Aug 2005 to 'save' a wavering house market then (against the wishes of their own Governor) and triggered off a mad price boom that pumped an already over-valued market even higher.
Additionally, anyone thinking "Is it really a good idea to be borrowing so much on my credit cards and bank loans" got the message that interest rates were never going to get any higher than about 4.75% (an incredibly low amount) again. So game on for yet more borrowing.
As for inflation only being 2% - what a joke. CPI might as well be called the 'Chinese Price Index' as it has been massaged and tailored to be biased towards ever cheaper goods flooding in from the far East. I'd guess that vast majority of people in the UK have seen their personal cost of living rise by far more than 2% in the past year. The fact that the dramatic drop from 2.4 to 1.9% has been attributed to a 'supermarket price battle' should give everyone an idea of just what a useless measure CPI really is.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
free4440273 wrote: »would not surprise me at all if the BofE ruined it all and cut rates by November. Incompetence writ large.
They can cut rates if they like but it won't reduce borrowing costs as, due to the Credit crunch Lenders will now have to add a risk Premium, in effect making borrowing even more expensive!0 -
yes agreed, but what this effectively means is that savers, yet again, have more to lose (literally) than borrowers - savers get clobbered all over again. the best fixed-rate bond i can find at the moment is Leeds BS postal bond at 6.70, and already this seems to have been closed. this is what i mean: prudent savers get punished once again. i really wish the BofE would do the 'correct' thing and raise rates to six (6) per cent. wishful thinking:rolleyes:mystic_trev wrote: »They can cut rates if they like but it won't reduce borrowing costs as, due to the Credit crunch Lenders will now have to add a risk Premium, in effect making borrowing even more expensive!BLOODBATH IN THE EVENING THEN? :shocked: OR PERHAPS THE AFTERNOON? OR THE MORNING? OH, FORGET THIS MALARKEY!
THE KILLERS :cool:
THE PUNISHER :dance: MATURE CHEDDAR ADDICT:cool:0 -
If interbank rates are rising, interest rates on savings acconuts should rise regardless of the base rate as it's cheaper for the bank to borrow from you than it is the interbank market so they compete more keenly for your funds.0
-
Interest rates are somewhat irrelevant on there own, they need to be considered with inflation levels. Interest rates may be historically low, but so is inflation (if you believe the stats)... same as when rates where around 15%, inflation was up at that level too.Anything posted is not given as advice but to help with a discussion.0
-
interesting...i actually thought interbank rates would not be beneficial in that regard. you have put a smile on my face. but i still think the BofE should raise rates as a 'cushion' to saversIf interbank rates are rising, interest rates on savings acconuts should rise regardless of the base rate as it's cheaper for the bank to borrow from you than it is the interbank market so they compete more keenly for your funds. BLOODBATH IN THE EVENING THEN? :shocked: OR PERHAPS THE AFTERNOON? OR THE MORNING? OH, FORGET THIS MALARKEY!
THE KILLERS :cool:
THE PUNISHER :dance: MATURE CHEDDAR ADDICT:cool:0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.1K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.2K Work, Benefits & Business
- 600.9K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards