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Housing market

stevec67 said:
How does the "increse unemployment, reduce interest rates" model work? I know of the inflation-interest rate model but not employment . After all the demographic who are most exposed to unemployment (young, unskilled, etc) are not mortgage borrowers.
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Phillips Curve, 'should' Reduce inflation...it's central bankers dirty little secret.

If it works that way, they can then reduce interest rates and the mess can start all over again.
 
andyoz said:
Yep, nearly 5% pretty easy to get on cash now. I won't be buying anything untill this house of cards takes a significant hair cut.

Ones hoping for interest rates to drop back only need look back at history. We aren't even up to the historical average yet...

Only way they'll drop now is with a significant rise in unemployment. So if people think it's hard to service a mortgage after recent interest rate increases, try and do it without any income at all...that's a whole next level of pain
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Indeed. Just been emailed offering 5.1% for 1 year and 5.3% for 2 years, thank you very much. The inflation demon has never been slayed by interest rates lower than the rate of inflation. It’s the adjustment for the absurd increase in money supply. I learned a very important lesson from my father. In the early 90’s a doubling of interest rates and a slowing business lost the house. Simply ran out of cash. Couldn’t sell a front line property on Falmouth harbour for any price, so the bank took it. Same happened with a friend, they had one of the best houses on the best road in St Ives, lost it. That was ‘only’ a doubling of IR’s. As I’ve previously said, it’s a slow motion car crash.
 
andyoz said:
Phillips Curve, 'should' Reduce inflation...it's central bankers dirty little secret.

If it works that way, they can then reduce interest rates and the mess can start all over again.
Click to expand...
Thanks. I can see how that might work. Like a lot of economics though, it's a bit tenuous, it relies on a number of links and assumptions. I remain unconvinced that given the social changes of the last few years (rich getting richer, poor getting poorer, London becoming Singapore-on-Thames) then allowing unemployment (typically a disease of the poor) to reduce wage demands (the poor, again) and so reduce inflation and so interest rates will affect the very different middle class economy where high skill levels allow employees to name their price, and these are the mortgage borrowers.
 
Ponty said:
Indeed. Just been emailed offering 5.1% for 1 year and 5.3% for 2 years, thank you very much. The inflation demon has never been slayed by interest rates lower than the rate of inflation. It’s the adjustment for the absurd increase in money supply. I learned a very important lesson from my father. In the early 90’s a doubling of interest rates and a slowing business lost the house. Simply ran out of cash. Couldn’t sell a front line property on Falmouth harbour for any price, so the bank took it. Same happened with a friend, they had one of the best houses on the best road in St Ives, lost it. That was ‘only’ a doubling of IR’s. As I’ve previously said, it’s a slow motion car crash.
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Who's offering 5% Ponty? I've got some savings earning FA at the moment.
 
Sue Pertwee-Tyr said:
:eek: How do people live in a house like that!
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Plenty do. I've some friends with 2 dogs and the place is a pigsty. It actually stops me visiting. Another friend is going the same way, he has mountains of "stuff" and you have to turn sideways in the hall to get past. Obviously the rooms are crammed with stuff. If you were very very organised you could house it all and use the house normally but he doesn't want to do this, or can't, and in any case I am sure that if you got Stacey Dooley and the gang in to tart the place up he would just buy a load more crap to stack in the hall.
 
Another email in, even my business savings are now 2.75% instant access. Was sod all for years. That lumpy CT bill won’t be paid until its due date, whereas I used to pay on receipt to get off my desk. At last, a little bonus for being an unpaid tax collector (VAT). Not due to HMRC until up to 5 months after being collected, so that’ll earn a little tickle.

Useful mortgage recalculation tool on this BBC article….

https://www.bbc.co.uk/news/business-65856683
 
Ponty said:
Close Brothers. They do cash ISA’s too (at slightly lower rates) if that’s your bag. Even instant access is 3.5% (as is Marcus). Think there might be slightly better instant access around but I like solid banks.

https://www.closesavings.co.uk/personal/savings-accounts/fixed-rate-bond
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"Solid banks'. I admire your faith!! FSCS covering only £85k, regardless of where your money is, and even then you need too look up the chain of ownership to ensure one bank isn't actually owned by another. All discussed here before, I think.

The 'Chip' banking app (FSCS) covered, offering 3.82% instant access.
 
stevec67 said:
Thanks. I can see how that might work. Like a lot of economics though, it's a bit tenuous, it relies on a number of links and assumptions. I remain unconvinced that given the social changes of the last few years (rich getting richer, poor getting poorer, London becoming Singapore-on-Thames) then allowing unemployment (typically a disease of the poor) to reduce wage demands (the poor, again) and so reduce inflation and so interest rates will affect the very different middle class economy where high skill levels allow employees to name their price, and these are the mortgage borrowers.
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Yes, I agree totally but this is how central bankers view the world ...laugh is when it doesn't follow their models they blame those pesky people that make up 'the economy' and not their models.
 
Ginger said:
"Solid banks'. I admire your faith!! FSCS covering only £85k, regardless of where your money is, and even then you need too look up the chain of ownership to ensure one bank isn't actually owned by another. All discussed here before, I think.

The 'Chip' banking app (FSCS) covered, offering 3.82% instant access.
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Never say never and all that, I’d happily place more than 85 with Close. If they go pop, we’re all in deep doo doo anyway. What do you think the truly wealthy do? They have millions on deposit with single banks.
 
Being doing back of the envelope tax return for 22/23 and am surprised to see the £1000 savings allowance breached, and then some. First time since this came in, I think. April last year most rates were under 1%. A paltry £20K p.a. for ISAs and P.Bs at a £50K max for years. My sister/bro.-in-law have started looking at AIM to reduce the tax but not for me. At least, divi's are only taxed at 8.25% (at the 20% band). Wish they'd up the holdings in P.B.s and ISAs. Anything tax-free that I've missed which doesn't involve long investment periods ?
 
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SVR's have soared so ones can't sit and wait it out.

Anyone remember the 3% interest rate increase "stress test" that made all the regulators feel warm and fuzzy.

Banks are reverting to form...they are not your friends and unfortunately a load of ones are realising that now.

What a total shit show this is becoming and it's only just started.
 
Yes, rate spreads are increasing, a reflection of forward risk IMHO. Noticed car leases increasing quite significantly, would love to know the cost of funds in some of those contract hire deals now, reckon the margin over swap is circa 5% for a good credit. God knows what it is now in things like mobile phone contracts etc.
 
#76

When you sign up for a mortgage you're basically doing a deal with the Devil.

Make sure your position is solid as a rock is my advice.
 
What were rates for the post 2008 crash ? Were they like 0.5% for 10 years or something like that ?

6% must be crapping oneself scenarios for a lot of people right now.
 
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