Brunello i've had arguments with you before about sterling and how important it is for an economy which relies on so much on imports maintaining a healthy currency. Massive interest rate cuts though perhaps already priced in to recent sterling falls send out panic signals and remove any semblance of a floor to those afforementioned falls. On top of that on a more philosophical level i think that if people borrow recklessly they should be allowed to go to the wall, it should never be the role of a central bank to protect the greedy, profligate and stupid from their decisions, especially at the expense of those who have refrained from the fast buck.
It's just that NR in the last 12 months has only passed on part of a rate cut each time ...... so I'm cynical about how little of 1.5% reduction they will actually reduce my mortgage rate by.
[cite]Posted By: SantaClaus[/cite]Brunello i've had arguments with you before about sterling and how important it is for an economy which relies on so much on imports maintaining a healthy currency. Massive interest rate cuts though perhaps already priced in to recent sterling falls send out panic signals and remove any semblance of a floor to those afforementioned falls. On top of that on a more philosophical level i think that if people borrow recklessly they should be allowed to go to the wall, it should never be the role of a central bank to protect the greedy, profligate and stupid from their decisions, especially at the expense of those who have refrained from the fast buck.
I think they send out the opposite to panic signals but more a determination to get the whole economy going. I agree that those that over borrow whether individuals or businesses should bear the consequences and take responsibilty if it goes wrong. I think the MPC & BOE are creating a floor rather than removing it as you suggest. The value of currency within about 20% either side of its PPP will have little effect and Sterling is not too mispriced at the moment against most currencies except in my view the Euro and that rate should be nearer 1.50 than 1.20.
the reality is this only affect those homeowners on non 'fixed rate' mortgages, I wonder what market share that is? Although I suppose it might affect longer term fixed rates.
Also I feel a steady decrease rather than the biggest reduction on record is more less likely to cause panic, but what do I know (very little on this topic)
[cite]Posted By: razil[/cite]the reality is this only affect those homeowners on non 'fixed rate' mortgages, I wonder what market share that is? Although I suppose it might affect longer term fixed rates.
Also I feel a steady decrease rather than the biggest reduction on record is more less likely to cause panic, but what do I know (very little on this topic)
Errr, and every business that has a loan (which is every business on planet earth).
According to what I read, there are 6 times more savers than borrowers in the UK.
Depending upon their investments they have probably seen their ISAs, TESSAs, PEPs etc. plummet in value over the past few weeks and now if they have a cash sum that is also going to take a hit.
I'm surprised that sterling hasn't taken a bigger hit today as usually lower interest rates means the sale of the currency, but I suppose recently it has dropped so much that there's not many pounds left to sell!
I would have understood a small rate cut at this stage but 1.5% is a huge chop.
Whilst I have feel for certain small businesses and homeowners, I have absolutely no sympathy for anybody that has borrowed excessively, in particular those who took out mortgages of five or six times their salary.
Any real economists out there? Will this improve the UK economy? And will I start getting 65 baht to the pound again?
[cite]Posted By: Bangkokaddick[/cite]I have absolutely no sympathy for anybody that has borrowed excessively, in particular those who took out mortgages of five or six times their salary.
Think that is slightly harsh. Considering someone earning £35,000 a year taking a mortgage five times their salary would get a place for £175,000 which is not much in the housing market.
What should these people have done? Throw £700 away a month in rent? Live with their parents till the age of 35?
I don't profess to know much about all this stuff but I don't think you can blame those who took out mortgages offered by the banks to get on their foot into the housing market.
people always gave me the advice as a first time buyer to get as much as you can afford to borrow because you'll never get that first time chance again.
[cite]Posted By: suzisausage[/cite]people always gave me the advice as a first time buyer to get as much as you can afford to borrow because you'll never get that first time chance again.
Hope you didn't buy recently, especially with that advice.
[cite]Posted By: Bangkokaddick[/cite]I have absolutely no sympathy for anybody that has borrowed excessively, in particular those who took out mortgages of five or six times their salary.
Think that is slightly harsh. Considering someone earning £35,000 a year taking a mortgage five times their salary would get a place for £175,000 which is not much in the housing market.
What should these people have done? Throw £700 away a month in rent? Live with their parents till the age of 35?
I don't profess to know much about all this stuff but I don't think you can blame those who took out mortgages offered by the banks to get on their foot into the housing market.
I understand why BA says what he does but I'm with you WSS.
Rents are criminally high, far more than one would be paying on a large mortgage prior to the "crunch," so people had little alternative but to borrow heavily even if it went against the grain.
Those who have tried to do the right thing and better themselves by going to university are now suffering the double whammy of being refused mortgages because of their student loans!
Whilst New Labour cannot be blamed wholly for the credit crunch student loans are very much down to them.
I have a daughter with a degree and professional qualification still living at home. She has done everything right according to what this government has deemed desirable yet the only way she is likely to get a mortgage is to pay through the nose for it at a rate considerably higher than the 3% base rate sits at after today.
New Labour has let our young (and not so young) people down bigtime in my opinion.
[cite]Posted By: LenGlover[/cite]New Labour has let our young (and not so young) people down bigtime in my opinion.
Completely agree with you Len. The cost of housing is insane in this country unless you are very rich, piss poor or old enough to have bought years ago. That's left a huge age and income bracket royally shafted by New Labour.
[cite]Posted By: LenGlover[/cite]New Labour has let our young (and not so young) people down bigtime in my opinion.
Completely agree with you Len. The cost of housing is insane in this country unless you are very rich, piss poor or old enough to have bought years ago. That's left a huge age and income bracket royally shafted by New Labour.
[cite]Posted By: suzisausage[/cite]people always gave me the advice as a first time buyer to get as much as you can afford to borrow because you'll never get that first time chance again.
Hope you didn't buy recently, especially with that advice.
no, over 18 months ago we got a 2 yr fixed. remortgaging in march. I think its good advice, as long as you can afford it then why not? if you played it safe and got a grotty 1 bed flat, when you could have a 3 bed place if you pushed yourself to afford it (cut down on luxuries) then why isn't it good advice?
F**king sickening. Dopey pillocks like me - who don't overspend and actually save money each month - are getting f***ed over because of the useless twonks who took out 300 grand mortgages on cupboards with no means of paying it back.
Suzi many people took the 'as much as you can afford' advise as meaning 'as much as you can borrow' and there in lies the situation we are all now in. Anyway whatever situation your in good luck to you but one thing's for sure you overpayed massively if you bought 18months ago as did i earlier this year.
Surely the real difference is the last time we entered recession 1989/93 interest rates were what 18% in 1992 at peak now they are 3% and may go to 0% so very different to the last recession. Even with negative equity a lot more people should be able continue to maintain their mortgage payments - if they stay in work.
WSS, I understand your point and I suppose I blame the banks for allowing people to take out mortgages that are potentially beyond their means. This, along with the buy to rent fad, has helped push up property prices and created the scenario that they are now trying to resolve.
Len, rents are high because property prices are high. However, with property prices falling will rents come down? No chance! In a place like Singapore, they have a very cyclical property market with prices rising and falling. Rents follow the trend. In the UK that hasn't really happened.
Leroy, couldn't agree more.
I'd like to see property prices be allowed to float and reach their real value. This would give more people a chance but of course this will leave so many people with negative equity that it just ain't gonna happen.
So, one question. What is the best investment at the moment? Maybe I'll start a new thread.
[cite]Posted By: suzisausage[/cite]people always gave me the advice as a first time buyer to get as much as you can afford to borrow because you'll never get that first time chance again.
Hope you didn't buy recently, especially with that advice.
no, over 18 months ago we got a 2 yr fixed. remortgaging in march. I think its good advice, as long as you can afford it then why not? if you played it safe and got a grotty 1 bed flat, when you could have a 3 bed place if you pushed yourself to afford it (cut down on luxuries) then why isn't it good advice?
snap, we have a fixed mortgage which ends in march, well it should actually be december as we completed on the 21 dec 2 years back, buts its march for some reason!! We are with abbey and i hope our mortgage wont go up, as that would be crippleing!! Any advice out there would be great!
Comments
It's another chance for Brown/Darling to say how they're looking after us all...
It's just that NR in the last 12 months has only passed on part of a rate cut each time ...... so I'm cynical about how little of 1.5% reduction they will actually reduce my mortgage rate by.
I think they send out the opposite to panic signals but more a determination to get the whole economy going. I agree that those that over borrow whether individuals or businesses should bear the consequences and take responsibilty if it goes wrong. I think the MPC & BOE are creating a floor rather than removing it as you suggest. The value of currency within about 20% either side of its PPP will have little effect and Sterling is not too mispriced at the moment against most currencies except in my view the Euro and that rate should be nearer 1.50 than 1.20.
Also I feel a steady decrease rather than the biggest reduction on record is more less likely to cause panic, but what do I know (very little on this topic)
Sorry. yes NR owned by Gov for a while now. BB owned by Santander(Abby)
I'm with The Woolwich:-)
You mean Barclays ;-)
Depending upon their investments they have probably seen their ISAs, TESSAs, PEPs etc. plummet in value over the past few weeks and now if they have a cash sum that is also going to take a hit.
I'm surprised that sterling hasn't taken a bigger hit today as usually lower interest rates means the sale of the currency, but I suppose recently it has dropped so much that there's not many pounds left to sell!
I would have understood a small rate cut at this stage but 1.5% is a huge chop.
Whilst I have feel for certain small businesses and homeowners, I have absolutely no sympathy for anybody that has borrowed excessively, in particular those who took out mortgages of five or six times their salary.
Any real economists out there? Will this improve the UK economy? And will I start getting 65 baht to the pound again?
What should these people have done? Throw £700 away a month in rent? Live with their parents till the age of 35?
I don't profess to know much about all this stuff but I don't think you can blame those who took out mortgages offered by the banks to get on their foot into the housing market.
Hope you didn't buy recently, especially with that advice.
I understand why BA says what he does but I'm with you WSS.
Rents are criminally high, far more than one would be paying on a large mortgage prior to the "crunch," so people had little alternative but to borrow heavily even if it went against the grain.
Those who have tried to do the right thing and better themselves by going to university are now suffering the double whammy of being refused mortgages because of their student loans!
Whilst New Labour cannot be blamed wholly for the credit crunch student loans are very much down to them.
I have a daughter with a degree and professional qualification still living at home. She has done everything right according to what this government has deemed desirable yet the only way she is likely to get a mortgage is to pay through the nose for it at a rate considerably higher than the 3% base rate sits at after today.
New Labour has let our young (and not so young) people down bigtime in my opinion.
Completely agree with you Len. The cost of housing is insane in this country unless you are very rich, piss poor or old enough to have bought years ago. That's left a huge age and income bracket royally shafted by New Labour.
100% agree with you both
no, over 18 months ago we got a 2 yr fixed. remortgaging in march. I think its good advice, as long as you can afford it then why not? if you played it safe and got a grotty 1 bed flat, when you could have a 3 bed place if you pushed yourself to afford it (cut down on luxuries) then why isn't it good advice?
Life stinks.
WSS, I understand your point and I suppose I blame the banks for allowing people to take out mortgages that are potentially beyond their means. This, along with the buy to rent fad, has helped push up property prices and created the scenario that they are now trying to resolve.
Len, rents are high because property prices are high. However, with property prices falling will rents come down? No chance! In a place like Singapore, they have a very cyclical property market with prices rising and falling. Rents follow the trend. In the UK that hasn't really happened.
Leroy, couldn't agree more.
I'd like to see property prices be allowed to float and reach their real value. This would give more people a chance but of course this will leave so many people with negative equity that it just ain't gonna happen.
So, one question. What is the best investment at the moment? Maybe I'll start a new thread.
snap, we have a fixed mortgage which ends in march, well it should actually be december as we completed on the 21 dec 2 years back, buts its march for some reason!! We are with abbey and i hope our mortgage wont go up, as that would be crippleing!! Any advice out there would be great!
(edit)
Or about to anyway
http://news.bbc.co.uk/1/hi/business/7716086.stm