fatscoobfella1

iTrader: (1)

Seeing that the BOE base rate over the last 10 years has historically hovered around the 5%-6% mark,how long do we think that the BOE can be artificially held down at 0.5% ??

It has been at this low rate for a while now,when is it going to start creeping back up again,surely it has too soon???

Hopefully not to the 17% of late 79 though..

http://www.bankofengland.co.uk/mfsd/iadb/Repo.asp

tony de wonderful

Everything depends on the property market.

It's absurd but 'it's too big to fail'

Gear Head

iTrader: (2)

I wouldn't call the situation absurd considering that a house is generally a persons most expensive purchase.

Steve vRS

Who knows? It all depends on inflation which all depends on pay rises which all depends on government policy which all depends on how well baby Florence Rose Endellion slept the previous night.

Steve

dpb

Seems absurd that they can just lower like this ,for ever

Prooping property prices which are still too high

GlesgaKiss

It's absurd having an economy reliant on the prices of a house for its survival. It's a big house of cards basically being propped up by near zero interest rates.

Gear Head

iTrader: (2)

It's called Macro-Economics.

Dingdongler

More like a giant Ponzi scheme

billythekid

I think the BOE rate will start moving in late 2012. Its very hard to see where it might go, some are saying 10%, others 5 or 6%. Almost impossible to tell.

tony de wonderful

Up is up.

billythekid

True, but 5% would mean most people on a tracker have to watch their outgoings, where as 10% would mean you might well not be able to meet the payments.

Does not matter a jot to anyone on a fixed rate though I guess... which is a lot of people.

tony de wonderful

Don't most fixed rates revert to trackers after 2-5 years?

CrisPDuk

That's why we're overpaying ours like mad at the moment

Terminator X

iTrader: (7)

Never again, 0.5% for eternity.

TX.

gpssti4

iTrader: (6)

No, usually to the banks standard variable rate - which I guess tracks the BoE base rate ..............

stilover

Sounds like the "in" phrase just a few years ago.

"House prices will never fall"

stilover

Terminator X

iTrader: (7)

don't think people actually said that, they just laughed at the doomsayers who'd been predicting falls for over 10 years without success & had been wasting their money paying rent for all that time + not gaining at all from the rises ...

TX.

GlesgaKiss

I wonder if all the people who bought in before the inevitable are laughing at the doomsayers, now they're sitting with substantial negative equity and can barely afford to put food on the table because they're having to divert so much of their income towards paying a mortgage. Yup, those silly doomsayers... why do they have to try and bring reality into the equation all the time?

House prices now are like the technology stocks were in the late 90s/early 00s - As you say: great for the people who profited from the speculative gamble, not so good for the economy in general or people who just look at houses as a place to live.

bugboy

Banks SVR is up to them. the BoE base rate influences trackers directly only. It is possable for most banks to increase the SVR without movement from the BoE. Unless it is one of the banks that have had state assistance, in which case they may be obliged but not bound to keep their SVR low while base rate is low.

Terminator X

iTrader: (7)

Glesga - impossible to call it fella which is my point. Some paid rent for 10yrs+ & waited (losers), some bought houses in mid 90s & watched them double in price ish (winners) whilst others bought just before the crash (losers) & are probably in trouble right now albeit low interest rates have softened the blow.

Interest rates are no different, ditto stocks / shares etc etc.

TX.

GlesgaKiss

Yes, but my point is that houses just became a speculative gamble rather than a place to stay or a genuine investment based on returns from rents. The whole economy was built up around the speculation, because as long as house prices were rising over inflation (which many people did think would go on forever), they could afford all sorts of stuff by extracting equity. Maybe even more houses in some people's cases. So a huge section of the economy was built up to serve the consumers, who were the people getting rich from just owning a house/property, but real wealth never increased.

Now we have the huge burden of all these consumer services, etc, that aren't required. Especially since any move higher in interest rates is going to make the situation much worse, as people will have to spend more and more of their income on paying mortgages, so they'll have much less to spend on consumer goods and services. Hence a lot of people will lose their jobs.

That would be the doomsday scenario anyway...

EddScott

Theres alot of wild speculation of double figure rates within 2 years, uncontrollable inflation, low rates for years to come, deflation. With such complete opposite ends of the spectrum it shows that most of these comments are just headline grabbers.

Rates will rise but unlikely to pass 5% over the next 5 years. Inflation will remain high until the 20% VAT is factored in and when QE has finally washed through the system. End of next year inflation will probably fall back and maybe below the 2% target.

EddScott

But at least SNet will still give you 2 for 1 on every post!