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  • Property-a-holics

    Bank hints at "accelerating" rate rises

    Bank policymakers voted unanimously to keep interest rates on hold at 0.5% at their latest meeting today.

    However, they said rates would need to rise "earlier" and by a "somewhat greater extent" than they thought at their last review in November.

    Economists think the next rate rise could come as soon as May.

    Full/source article

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    Interest rates, house prices, rents - all act a bit like a pendulum, the more pushed in one direction when the swing back starts likely to go further and faster than if the pendulum had started the move back sooner.

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    With the uncertainty that Brexit will bring I had anticipated for interest rates to remain low for the next few years; I am therefore surprised to be reading these comments from the BoE.

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    Any interest rate rise will intensify the effects of S24 - a perfect storm is brewing I fear . . . .

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    I do fear that a storm is brewing - however, to my mind the introduction of s24 has forced many of us to focus our minds on the strength\risk of our portfolios.

    Personally, had s24 and the new stamp duty changes not been introduced, I would have continued unabated with the old 75% LTV model, which would have seen me far more exposed than I currently am to interest rate rises.


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    Absolutely, I agree that S24 has achieved the goal of reducing the LTV of the portfolios of many and reducing exposure to interest rate rises is an important thing, especially now.

    Pity it was retrospective though as the reduction in debt could have been achieved by less draconian measures.

    I reduced my portfolio by 4 properties this year and the equity of those sold has gone to paying down the mortgages of the others.

    It is scary however to see the daily posts from wide eyed newbies 'looking to get into property'.

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    It's almost as if some sort of crash is wanted.......

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    The BoE knows how much carnage Brexshit is going to cause to the economy, and need to raise rates to give more room to reduce later on. That is:

    - If rates are at 0.5%, then the most they can reduce it (without going into negative rates, which create a whole load of additional complexity). 

    - If rates are at 1.5% when the clusterf.ck happens in March 2019, the BoE has a lot more room for manoeuvre.

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    I sometimes feel the BoE is simply reacting to events as they occur - they are as uncertain on these matters as the rest of us.

    To give the impression they have a plan, they send out these announcements now and again - following this weeks events on world stock markets this is the obvious "hedge my bets" announcement I too would make.

    Government and household debt is so out of control that making future predictions with any accuracy or certainty is almost impossible.

    How can the BoE measure confidence? When people start to get nervous and they behave erratically - such things cannot be forecast.


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    Hadn't you heard the Govt. and BoE is in constant contact with Mystic Meg? She's one of their highest paid thinktank/market strategists so I hear ;->

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    IR should already be at zero

    Without continuous QE the economy is a fantasy

    Lenders should be forced to reduce IR to far lower rates

    The differentials that lenders are currently  charging are a national disgrace.

    Increasing IR will just cause LL to sell up.

    Without low rates much of the PRS is unviable

    Much of the economy has only remained about viable because of low IR.

    Got will cause a depression if it increases IR.

    Mortgage  rates of 10% are simply unsustainable  which is what they would be if the BoE rate returned to 5%.

    Increased IR are the last thing the economy needs.

    The effects  of the CC still haven't worked their way through the economy.

    Govt would be just continuing the logical results of the CC which it largely  staved off by reducing IR.

    Believe me BoE rates of 5% are unviable  for the economy.

    The weight of consumer debt is so enormous there is no resilience to cope from the populace at large.

    Inflation is nothing.

    It is a price worth paying just to keep the whole show on the road. I and many other LL will have to sell up if rates achieve 5%

    I simply cannot afford 10% IR which is what they would go to if the BoE rate resumed to 5%

    If rates do start to increase then I might as well sell up as I will be making no money and will be effectively  subsidising my tenants

    That just isn't going to happen.

    Only  low IR have housed my tenants.

    There simply won't be the buyers if LL need to sell.

    Lenders will stop lending like in the CC.

    It will be a calamity for the housing market

    It would be far better if the BoE introduced credit controls.

    But Govt won't allow that as it knows with continuous  credit the UK economy is sunk.

    After all bills have been paid very few people have any savings remaining.

    They use credit to buy things  they couldn't otherwise afford.

    If it wasn't for such credit deals the UK car market would have collapsed.

    Making credit more expensive  is a recipe for economic disaster.

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