How interest rates affect property values

mwpt

AnotherJoe wrote: »

So?

That doesn't tell you how much, on what time scale, nor can it because there are numerous other factors. Why are you fixated on one of many many factors ? You might as well argue that the amount of money a football team has to spend, is the only factor in determining a teams position in the league table.

And then you've got Leicester City and Chelsea.

When you can tell me, what a (say) 1% rise in interest rates now will do to house prices in 1 years time, then I'll be impressed. And I'd be even more impressed if you were right. I look forward to some numbers from you.

If you can't do that, then I stand by my position, a big fat "so what?"

What a silly post. My experience on this board is that every time I mention low cost of credit as an upward driver of house prices, I am shot down. So, since the forum is a place of debate, I debate it. You are quite welcome to say "so what" but why do you bother to come on to this thread and tell me that you're not interested?

I also expect that you have to say "so what" when someone tells you that building rates are down but population is increasing. Let me reword your silly little viewpoint:

When you can tell me, what a (say) 1% rise in population will do to house prices in 1 years time, then I'll be impressed. And I'd be even more impressed if you were right. I look forward to some numbers from you.

If you can't do that, then I stand by my position, a big fat "so what?"

mwpt

Ok, to summarise the thread (and many others).

People agreeing that low interest rates push house prices up: Me
People not agreeing with that: Everyone else

Before you start your disagreements, please consider carefully what I have actually said in my posts, not what you think I said.

wotsthat

Interest rates are a junior factor in determining house prices and there are many ifs and buts that caveat the link.

You know this - count the number of times you said something like 'if demand > supply'

Don't start getting Crashy Time.

mwpt

wotsthat wrote: »

Interest rates are a junior factor in determining house prices and there are many ifs and buts that caveat the link.

You know this - count the number of times you said something like 'if demand > supply'

Don't start getting Crashy Time.

Doesn't matter what I say, the usual suspects will disagree. The accusation of CrashyTime is incredibly rich.

I'm pretty much done here.

wotsthat

mwpt wrote: »

Doesn't matter what I say, the usual suspects will disagree. The accusation of CrashyTime is incredibly rich.

I'm pretty much done here.

I don't think anyone disagreed in principle; rather they suggested the impact of interest rates on UK house prices was tiny in comparison to other factors.

If you're going to throw your toys out of the pram if people don't wholeheartedly agree with you then maybe the Internet isn't for you.

caronoel

mwpt wrote: »

Doesn't matter what I say, the usual suspects will disagree. The accusation of CrashyTime is incredibly rich.

I'm pretty much done here.

Was it this sort of childish tantrum that got you banned from hpc?

mwpt

Ok fair, that was a bit of a strop, I'll take the comments on the chin.

In my defence though, interest low interest rates push up house prices.

cells

mwpt wrote: »

In my defence though, low interest rates push up house prices.

unless the house happens to be in stoke in which case low interest rates apear to push down house prices.....or one of the other 100 towns and cities across the country where prices are the same or lower than they were a decade ago.....

wotsthat

mwpt wrote: »

In my defence though, interest low interest rates push up house prices.

If people, based on the most they can afford to repay each month, extrapolate this to arrive at a maximum loan size and ..

if they wish to borrow this maximum and ..

if they always bid this maximum loan size when buying houses and ..

if the calculated maximum is less than their lender's earning multiple criteria and ..

if their maximum affordable payment is less than their lender deems affordable if the mortgage rate was 7%

then yes, there's a direct correlation between interest rates and house prices.

However, the real world ensures the correlation is weak and a junior partner in setting house prices.

mwpt

wotsthat wrote: »

If people, based on the most they can afford to repay each month, extrapolate this to arrive at a maximum loan size and ..

Incorrect. Low rates can mean your monthly payment is less per month even while house prices continue to go up. You could work out an example to check this.

I'll even mention the more direct case of BTL. If BTL uses leverage to buy property and mortgage rates for BTL were at 8% instead of 3% (or whatever they are), they probably could not run a solvent business at the current house prices. Adjust figures as needed, I'm just guessing to make the point.