The BOE interest rate has been low for now for an unpresidented length of time.

I reckon in 2011 it will start to creep up again.I think it will be low in relation to whats happened over the last 25 years,but nothing is certain.

I cant even begin to understand finance on a countrywide scale,but history dictates that the BOE base rate is being kept artificially low to try and stimulate house prices..

But at what price elsewhere???

Would be nice if savers were getting a decent rate for a start...

 

I need the market to drop 30% (then recover in 5 years time) to make my financial strategy work out for me!

Mind you, savings rates of 8% would also take care of that!

 

yes it means fewer people have more money -- hence what we see below

 

I cant even begin to understand finance on a countrywide scale,but history dictates that the BOE base rate is being kept artificially low to try and stimulate house prices..

In my opinion the base rate is being kept low to stimulate the Economy,not house prices .More money in peoples pockets means they have more to spend in the shops,etc which stimulates the whole economy .
I dont think the government have any need or wish to get people buying property ,its the whole country that needs a lift, not one area alone.

 

Correct ..... but, a side effect is to make it easier for people to repay their mortgages.

If the Interest Rate does increase, even by a small amount, the House market will collapse.

 

Hang on ,do we almost agree ??!!!!!

Correct ,people will be able to afford their mortgages ,so they can also spend on other goods .Stimulating other areas and keeping businesses going at the same time .Nothing to do with allowing house price inflation to continue ,which although good for some ,me included ,serves no purpose to the country as a whole .
Not sure small increases would lead to house price collapse but it will certainly put a dampner on the country recovering ,if not a total stall of the recovery .
Its a very fine balancing act which I think they have got right for the moment .

 

They can afford to pay the interest on their mortgage because it is being subsidised by savers. Their house has been devalued by the depreciation of sterling.

Anyone sensible would pay what they save off the capital not splurge it on more imported goods.

 

Its never gonna happen and I'm sure I said this when you 1st started this thread, You have already had the worst drop any other drop is fro the cautious and not the desperate.

 

Well yes, anyone sensible will pay down their mortgage ,whilst the rates are low .But at the same time it still gives the majority of the country the feel better factor .
And at the end of the day ,why would the government help out people with a small forune in the bank !!!!!.They dont need any help and will not affect the wellbeing of the country ,just because they dont make any money on their savings .They wont suddenly need state help .
Average Joe who lives the average life ,is the majority that is being helped ,unfortunately at the expense of the Elite !!! Bur Hey ho ,we will have our day .(Did I sound like PSL then ???)

 

Agree. Don't dispute the 30% drop as this is entirely possible, but I don't think the recovery part is likely. Runaway house prices - which really have been increasing overall at a rate which is simply not sustainalbe for the past 30 years - are almost certainly over.

IMO prices are most likely to drop fairly sharply over the next year or two, but then continue to fall at a slow rate for the next 5-10years at least. Along with house prices we are likely to see out standard of living fall too - the UK along with many other Western economics just aren't viable in the current models anymore (can't continue exporting very little to other countries, and importing loads of manufactured goods forever. We've been plugging this gap with borrowing for too long, and have just begun to feel the consequences)

Before any of the house-price dreamers jump in and say 'its a small island, and interest rates are low' take a look at Japan as a case study. Interest rates are 0%, they're the most crowded island country in the world and house prices have been falling for 15years!

We are in a not too dis-similar situation to Japan.. only they still have a farily strong export driven economy - we dont.

 

I work for a large housing company and say 3 years ago when this all started work was dire, now they have dropped prices drastically for all workers. If there is another double dip the cost will be absorbed by the workers again and not the builders. When people complain about their precious new build not being up to thier liking they should realise the ****ty wage most people get paid now and the fact quality is gonna suffer

 

Quality should not suffer if the money paid for a service is reduced ..... not for true professionals with a respect for their work, that is.

 

Don't go spreading rumours like that!

My very existance on here is fed by the fact that I have the unique ability not to agree with anyone

 

I wouldn't get too carried away by that argument. Just because it's happened in Japan doesn't make it any more than just a faint possibility here. There are actually lots of differences between us and Japan, just one of them being that they have a falling population and different demographics to us. Thanks to Bliar and uncontrolled immigration we have a growing population.

 

HAHAHAHA are you serious, I reckon next year the housing market will pick up and when it does there will be some really quality(joke) houses turned out as firms try get to some good tradesmen back, most firms don't care about rubbish work unless the client spots it.

 

I guess the only true Professional on a building site is the Architect - so, yes, maybe the quality is **** if the wolf wistling, **** showing, Tradesmen get 1p less for a job than they got last week!!

 

If only it were 1p Prices people get paid on the buildings now are equivelant to 10 years ago and some prices are even worse

 

I suggest they retrain as Vets then ....... good, easy, money there!

But they would have to clear their trade transits out of sandwich boxes, old coke cans and the last 12 months worth of The Star and Sunday Sport

 

So what are your thoughts on picking up properties with long term investment in mind. 20 + years?

 

That makes good economic sense; punish the prudent and reward the reckless?

Have you heard of moral hazard?

Why should prudent savers be punished to bail-out those who made bad economic decisions and took on too much debt?

 

because you can't build a dynamic growing economy when everyone saves -- look at Japan, where the economy has stagnated for the last 20 years

The Japanese have seriously proposed (alongside removing paper currency) negative interest rates - i.e. if you left 100K in the bank for a year, by the end it would be 99k, hence the need to spend

lets face it if you are not careful you become economic cannon fodder

 

Buy everything you can when the big drop has happened .... 2012 I reckon.

 

Well I wouldnt say punish the wealthy prudent peeps ,but they dont need any help if they are rolling in it .I am talking about keeping Average Joe in a position whereby he can survive and support the economy ,and lets face it there are far more Average Joes than there are Prudent Well off Tarquins !!!!

And lets face it we could do with the savers spending some more of there cash to help as well .

As for the ******* on benefit ,well ,it will help if/when, they make it far less comfortable for them ,to get some of those bone idle to55ers into work and contributing ,but thats another topic .

 

Mortgage Approvals now at a 10 year low ...... this is a bad sign for those thinking that House Prices will remain high, or even increase.

It simply means that no-one is buying .... yet more and more properties appear on the market. This can only result in one thing - a price drop (probably of massive proportions).

 

Back to Disagreeing !!!!!

 

1st post pete and we still aren't where you wanted us to be, maybe if you post it another 100 times it will happen

 

Soft commodities are strong at the moment. Just wondering whether much of that could be inflation and here to stay. That's got to show up in the figures once it works its way through the system, and if it's over 3 percent (or closer to 5 percent if looking at RPI) just now then surely this is not a good sign.

 

Yeah, savings and investment - the obstacles of growth...

 

Remember credit comes from savings.

 

I'm trying - I'm trying .......