rate cut and the housing market ...

hgllgh

so the spineless bafoons in the BOE have played their cards and gambled. What affect do you think this will have onthe housing market?

My view is that, as in the US where they have cut by more that 0.25% it will not make a difference to the credit crunch and therefore will not mean increasing prices. Also most of the financial articles I've been through are saying the cut will not be passed on to borrowers as banks seek to recoup their losses. Anyone agree? disagree?

Running_Horse

Is there any reason the UK needs substantially higher interest rates than our American and European counterparts? Lets have more of the same. There is more to consider than just the housing market.

abaxas

Running_Horse wrote: »

Is there any reason the UK needs substantially higher interest rates than our American and European counterparts? Lets have more of the same. There is more to consider than just the housing market.

Agreed, you cant have a mortgage if you have no job.

dannyboycey

Running_Horse wrote: »

Is there any reason the UK needs substantially higher interest rates than our American and European counterparts?

Errr... because the BOE sets rates for OUR economy, not theirs. The aim is to keep inflation under control. Therefore a reduction cannot be justified.

Running_Horse

abaxas wrote: »

Agreed, you cant have a mortgage if you have no job.

I have a job.

Do you believe increasing interest rates would lower unemployment?

Running_Horse

dannyboycey wrote: »

Errr... because the BOE sets rates for OUR economy, not theirs. The aim is to keep inflation under control. Therefore a reduction cannot be justified.

And higher interest ratesd means it is more expensive for our employers to borrow and invest, than it is for our competitors in Europe and America.

You didn't answer why we need higher interest rates than our competitors.

Romani_Ite_Domum

I am sure that this cut will not save the housing market.

However, we must not underestimate the power of sentiment The average man in the street does look beyond the amount their mortgage will cost .

This cut will send the message that IRs had peaked and will be on the way down. VIs (EAs banks FIs) will capitalise on this. This cut will provide some short term liquidity into the housing market and lessen the MOM falls.

After that the drop will be faster and in the long run, much worse.

dannyboycey

Running_Horse wrote: »

You didn't answer why we need higher interest rates than our competitors.

So a good benchmark by which to judge how well the BOE are doing with relation to setting rates is how low they are in relation to Europe or America. America's is lower than ours now so I guess their economy must be in great shape!?

Wherever you bought your economic textbook from, I suggest you return in and ask for your money back.

Running_Horse

dannyboycey wrote: »

Wherever you bought your economic textbook from, I suggest you return in and ask for your money back.

More insults? Oh dear. I'm just waiting for your miserable brother in arms, Squatnow, to turn up and tell us we're all doomed. Like it or not interest rates are now on the way down.

And about time too.:T :j :beer: :rotfl:

MidTwentySomthing

Running Horse, a word of advice:

One swallow does not equal a summer.

Oil and food are on the up, and inflation is likley to get worse. Everyone is saying this.

I reckon they know the housing market is dead, they know any cuts won't be pased on by the lender, however they are trying to give banks some "wiggle room" to try and stop the whole house of cards collapsing.

And it is very likely that this is a "token cut". IT will al depend on what america and europe do next, and what happens to LIBOR rates.

ruggedtoast

Well from my point of view the rate cut means I earn less on my savings. The devaluation of the pound and the increased inflation also means I feel less well off than before.

Combine this with a falling housing market and Im , ooh about 0.25% less inclined to buy than I was this morning. :j