Mortgage rates are likely to soar

[TimberWolf]

Says Benny Hill (AKA Mervyn).

King: Our whole system's in crisis... Governor warns mortgage rates are likely to soar and tells banks to slash bonuses | Mail Online

Could this be the crash that should have happened 10 years ago and finally we will be able to get back to business. Nah, I reckon he'll print to kingdom come before interest rates go up by more than an infinitesimal.

[PAH]

I've just started reading The Alpha Strategy which though it was published in 1980 details some startling similarities to what we're seeing today.

- inflation due to money printing

- how inflation in prices in some areas (e.g. energy, food) causes other stuff to become cheaper (e.g. imported tat not currently under flood water) due to the money supply being limited (even printing money limits the supply due to devaluation) so people stop spending on other stuff causing recession

- how the move from gold or physical items as money to paper/electronic money allows fractional reserve banking (a bank only needs to keep a fraction of the money it receives in reserve and can loan out the rest while charging interest) to result in the massive bank debts and bailouts we see today due to them always effectively being insolvent (they couldn't afford to pay out all the money given to them for safekeeping if there was a bank run as they've lent most of it back out)

It's available for free on the internet (first result in google points to a free PDF version) and should be required reading for anyone wondering how the current financial mess happened, and what powers are behind it.

[BlasterBates]

Credit is drying up though this is mainly in the Eurozone at the moment, but this will spread. This is the big danger, when the banks don't have money to lend then business or mortgage rates will soar. However, if you have savings you should be able to get cracking saving rates :rubs hands with glee

[PAH]

Don't be greedy. We've already got high interest savings rates of 3%, and inflation will fall next year, Merv said so.

If the banks were so hard up for cash they'd up those rates. Seems they can borrow it cheaper elsewhere.

[alreadypacked]

Credit is drying up though this is mainly in the Eurozone at the moment, but this will spread. This is the big danger, when the banks don't have money to lend then business or mortgage rates will soar. However, if you have savings you should be able to get cracking saving rates :rubs hands with glee

FTFY

[russell]

I hope rates do go up and lots of folks start defaulting. Loads of cheap property will be auctioned off. Boomed! We also get decent saving rates, boomed!!

[Jeff Maginty]

..

[PAH]

I hope rates do go up and lots of folks start defaulting. Loads of cheap property will be auctioned off. Boomed! We also get decent saving rates, boomed!!

Before property becomes cheap the banks will steal your savings, the compensation scheme will only be able to afford fractions of a pound (banks are too big to fail but you aren't) and the mortgage interest rates will be in double figures.

So you'll be no better off.

Is now a good time to buy gold? It's only 5 times the historical average of £200/ounce that it remained at for 30 years until 2008*

* source: GoldPrice.org

[post number 4,666: the is in the detail]

[doomage]

Well lets face it...

1) The property market is long overdue for a correction (ie prices returning to the level where average house price = 3.5 * average salary)

2) Savers are long overdue a break (since they've been punished for the mistakes of the reckless lenders/borrowers/spenders for so long).

BRING IT ON!!

3.5 * average salary ~ average house price of £87,000

I reckon more likely it should level out at 3 * average household income ~ £105,000

Still a hefty drop from today's average £241,461 from the bbc

[Hill Station Murthy]

Says Benny Hill (AKA Mervyn).

King: Our whole system's in crisis... Governor warns mortgage rates are likely to soar and tells banks to slash bonuses | Mail Online

Could this be the crash that should have happened 10 years ago and finally we will be able to get back to business. Nah, I reckon he'll print to kingdom come before interest rates go up by more than an infinitesimal.

This is long overdue in my considered opinion.

We have situation where many youngsters are living in boxes and elderly have no source of income from the interests on their savings.

The net effect of raising interest rates will make house prices lower and therefore more affordable to these youngsters and elderly will get more money from their savings.

A levy could be placed on these increased earnings of these elderly to help pay the deposits of the youngsters to get them on the first runs of the ladder.