Fed Hike

Thrugelmir

setmefree2 wrote: »

I guess it's predictable but I've gotta wonder if the MPC is being too slow in raising rates and is fueling a horrible housing bubble??? How are all those borrowers with big mortgages going to cope when rates start rising?

Most UK predictions seem to think May and Nov 2016 for a UK hike.

Mortgage rates in the USA are already around 4.2%. So different scenario to the UK.

Garethgrew

Of course the rate increase of .025% came off without a hitch during the first day and the Mainstream Media was all "high fives" but don't let the lack of action fool you...there is a lot more to comes before the year is out as this will be looked back on as the Straw that Broke the Camel's Back for the Fed.

Remember, the problem is debt and derivatives. Massive debt and derivatives. Each, in it's own way, have just been popped by a tiny pin !!!!! of .025%.

This is the End Game.

mwpt

Garethgrew wrote: »

Of course the rate increase of .025% came off without a hitch during the first day and the Mainstream Media was all "high fives" but don't let the lack of action fool you...there is a lot more to comes before the year is out as this will be looked back on as the Straw that Broke the Camel's Back for the Fed.

Remember, the problem is debt and derivatives. Massive debt and derivatives. Each, in it's own way, have just been popped by a tiny pin !!!!! of .025%.

This is the End Game.

Thanks for the heads up mate. It's hard to argue with such a thorough analysis.

:cool:

purch

Garethgrew wrote: »

Of course the rate increase of .025% came off without a hitch during the first day and the Mainstream Media was all "high fives" but don't let the lack of action fool you...there is a lot more to comes before the year is out as this will be looked back on as the Straw that Broke the Camel's Back for the Fed.

Remember, the problem is debt and derivatives. Massive debt and derivatives. Each, in it's own way, have just been popped by a tiny pin !!!!! of .025%.

This is the End Game.

I shouldn't ramble on about things that you know nothing about.

0.025 equals 1/40

You do the math....................oops, maybe on second thoughts let someone else do the math :eek:

mayonnaise

Garethgrew wrote: »

This is the End Game.

Another one!? :mad:

I only just recovered from the 2012 Mayan apocalypse.

cells

setmefree2 wrote: »

I guess it's predictable but I've gotta wonder if the MPC is being too slow in raising rates and is fueling a horrible housing bubble??? How are all those borrowers with big mortgages going to cope when rates start rising?

Most UK predictions seem to think May and Nov 2016 for a UK hike.

for the banks their funding source is mostly deposits and a lot of deposits attract 0% interest

I dont know the figure (if someone can point it out that would be good) but lets say half a banks deposits are at or near 0% rate. A quarter at just above the BOE rate and a quarter from interbank lending at just above the BOE rate

That would mean, if the BOE put rates to 3%
Half of the banks funding is still at 0%
The other half at say 3.3%
The average thus 1.65%

Currently the spreads for the best borrowers seems to be about 1.5%

So 1.5% plus 1.65% gives mortgage rates of circa 3.15%


basically as rates increase the spread between mortgage borrowers and boe rate decreases

Mistermeaner

Can you run all that passed me again. I don't follow

vivatifosi

We took out a new three year fix at 2.09% recently. It's about the only time we've timed it right.

I think I should start a thread called... oh I dunno, maybe something along the lines of my Interest Rate Gamble Finally Pays Off.

michaels

vivatifosi wrote: »

We took out a new three year fix at 2.09% recently. It's about the only time we've timed it right.

I think I should start a thread called... oh I dunno, maybe something along the lines of my Interest Rate Gamble Finally Pays Off.

Before you join the insufferably smug club, you haven't actually timed it right until variable rates climb above your fixed rate but don't got so high that you would have been better off with a longer fix...

MFW_ASAP