Interest Rates going back up to normal levels again?

triathlon

Crashy_Time wrote: »

As global/US bond rates rise then so do mortgage rates, doesn`t matter what the BOE say. The difference between now and the 2008 crisis is that back then all the main central banks were co-ordinating policy, now the US is going for higher rates/inflation and China has cards to play in return to Trumps game, the BOE are just going to follow the US like they always do.

Wall street opens, regains it's losses, yet anther property armageddon avoided.....

Again!!

System

Crashy_Time wrote: »

Oh Dear! Six or so people posting to an audience of....well about six people,

Says the person with one of the highest post per day ratios on the board.

Thrugelmir

triathlon wrote: »

Wall street opens, regains it's losses, yet anther property armageddon avoided.....

Again!!

The DOW is down over 4% according to my screen........:eek:

Boeing, Chevron and Exxon leading the market south.

Markets seem nervous.

Electrum

Its going to take years to get back upto 5-6% normal levels, but I can see over 3% in a couple of years time.

The question is what effect will this have on peoples mortgage payments? Will the government have something in place to help people pay their monthly payments when interest rates get back to normal?

The proplem is that the uneducated thought that these emergency low interest rates were the new norm, they didnt know that normal is 5%

GreatApe

Why do people think there could even be a normal rate of return for cash?

For a start there isn't a normal anything the modern era is only about 30 years old hardly much time to draw concrete conclusions

Pre WW2 was another universe

1945-1990 was rebuilding plus the boom in electricity usage driving productivity

1990-2020 was the digital age

2020-2050 will be the AI age


As I keep arguing real rates of return will go negative and stay there. Already the assets perceived as least risky are negative. 20 year index linked gilts are negative 1.5% for example.

The rebuilding and electricity age 1945-1990 was high capital needs means expensive credit
1990-2020 was the digital age much leas need for capital so cheaper capital
2020-2050 with the AI age will mean we have created capital that can create capital which will at first leg the price to zero and then go negative possibly highly negative.

What is the price of capital or the return on capital when you have robots that can make robots that can make robots that can make anything and everything?

MobileSaver

Electrum wrote: »

The question is what effect will this have on peoples mortgage payments?

The proplem is that the uneducated thought that these emergency low interest rates were the new norm, they didnt know that normal is 5%

Fortunately the banks did know that the norm is around 4% and so mortgage affordability tests use anything up to 8.75% as a worst case scenario; so the effect this will have on people's ability to continue paying their mortgage will be minimal, much to the frustration of the HPC crowd...

AG47

If the green shoots story was true then interest rates would be back to normal

Filo25

Rates held at 0.5% on a 7:2 vote, it will be interesting to see the comments as always.

I would imagine 2 increases to 1.0% by the end of the year is still viewed as the most likely outcome.

Crashy_Time

MobileSaver wrote: »

Fortunately the banks did know that the norm is around 4% and so mortgage affordability tests use anything up to 8.75% as a worst case scenario; so the effect this will have on people's ability to continue paying their mortgage will be minimal, much to the frustration of the HPC crowd...

And much to the frustration of those trying to sell houses for bubble prices + 20%.....:rotfl: All that is happening as banks tighten is that sales are plummeting, it is classic bubble/ponzi theory in action

GreatApe

Crashy_Time wrote: »

And much to the frustration of those trying to sell houses for bubble prices + 20%.....:rotfl: All that is happening as banks tighten is that sales are plummeting, it is classic bubble/ponzi theory in action

100,000 sales a month is sales plummeting?