interest rate cuts could be on their way

carpetbelly

Romani_Ite_Domum wrote: »

So did I went I wrote it

lets just bang everyone up

dannyboycey

santashelper wrote: »

heard a report today that there may soon be a cut in interest rates

Not a chance. This is blatent propaganda to make people think it's ok to have a Christmas 'blowout' in the shops in order to boost flagging retail figures.

WTF?_2

Generali wrote: »

My suspicion is that the most likely outcome from here is a period of stagflation (nil GDP growth or thereabouts (which equates to rising unemployment) and rising prices). The only caveat I put on that is that if consumers panic and start trying to pay down borrowing quickly and en masse then there's a small chance that we end up with deflation and depression.

I don't think consumers even understand the notion of paying down debt quickly - the modern trend is just to borrow more and more whilst making minimum payments .

IMO once the property market starts falling (as it is now agreed by all will happen) it'll precipitate a wider recession with jobs in finance and retail sharply hit. This will in turn lead to bigger drops in property as no-one feels like borrowing lots of money to buy a house in a recession.

At this point, cutting interest rates will do little to shore up house prices. It might help businesses and those in debt but the resulting inflation isn't going to help anyone.


In short - we're doomed

dolce_vita

carpetbelly wrote: »

I don't like the high prices and especially as I got gazumped on a property by a BTL'er.

You did not get gazumped by a BTLer.

Only sellers can gazump, not another buyer.

(just thought I point this out. again)

WTF?_2

nollag2006 wrote: »

As a firm fan of discounted trackers, this is great news for me !! Whoppeee !!!

Add into that a nice dollop of wage (and hopefully rental inflation) and we should start to see mortgage payments become a lot less painful for a lorra people !!

Great news all round !!!

Where is this wage inflation of which you speak going to come from?


In case you haven't noticed, even in period of sustained economic good times, average wages haven't been rising by much - due in large part to large scale immigration from poorer Eastern European countries.

Once the economy starts going down the pan, there will be a LOT less jobs to go around. Workers will be in an even poorer position to push for higher wages and wage inflation is most unlikely to keep up with monetary inflation.

Further, the UK no longer has a strong export-led industrial base that can actually benefit from devaluation to offset the problems of inflation, most stuff these days is imported - even food.

Low wage inflation plus high price inflation is extremely bad news for those in debt. They will have less money to service the debt. And interest rates are so low at the moment that there isn't a whole lot of scope for large cuts anyway. If people can't handle 5.75% base rates they're pretty much a lost cause as regards credit-worthiness. 0.25% here or there isn't going to make them solvent.

carpetbelly

dolce_vita wrote: »

You did not get gazumped by a BTLer.

Only sellers can gazump, not another buyer.

(just thought I point this out. again)

Yes I could have structured my sentence a little better to show that I know I got gazumped, and I know it was a BTL'er who'd gone in and offered a higher amount than I had. Better? :rolleyes:

free4440273

As I've said before on this forum: cutting rates is not the solution; there has to be an equilibrium, otherwise we just keep on discouraging saving (via artificially low interest rates) and discouraging prudence (people just keep on borrowing).

dannyboycey

free4440273 wrote: »

As I've said before on this forum: cutting rates is not the solution; there has to be an equilibrium, otherwise we just keep on discouraging saving (via artificially low interest rates) and discouraging prudence (people just keep on borrowing).

I remember once reading an interview with Sir Richard Branson. They asked if there was a secret to becoming rich. He said something along the lines of "Yes, make sure you spend less than you earn each month". So simple, but it appears that very few people are able to follow that advice.

Generali

dannyboycey wrote: »

I remember once reading an interview with Sir Richard Branson. They asked if there was a secret to becoming rich. He said something along the lines of "Yes, make sure you spend less than you earn each month". So simple, but it appears that very few people are able to follow that advice.

Save £100pw for 40 years @ 7% and you have a million quid.

free4440273

...try actually getting seven per cent (care of BofE).