House Price Crash forum > The First I R Change In A Series Is By Far The Most Important

frugalista

May 2 2006, 05:45 PM

Last August's rate cut -- it only knocked a few quid off the average mortgage, but the psychological effect was much bigger. Estate agents, IFAs, lenders and others could point to it and say, "look, interest rates are coming down".

Similarly, if the next move is up by 0.25%, it will only add a few quid to the average mortgage, but the effect on sentiment could be bigger.

Discuss.

frugalista

Stressed-Out

May 2 2006, 09:37 PM

QUOTE(frugalista @ May 2 2006, 06:45 PM) [snapback]365219[/snapback]

Last August's rate cut -- it only knocked a few quid off the average mortgage, but the psychological effect was much bigger. Estate agents, IFAs, lenders and others could point to it and say, "look, interest rates are coming down".

Similarly, if the next move is up by 0.25%, it will only add a few quid to the average mortgage, but the effect on sentiment could be bigger.

Discuss.

frugalista

I've been praying for a 0.25% IR cut since December 2005.
All of the HP falls we saw from Autumn 2004 to Summer 2005 were down to quarter per cent IR rises. The market is so volatile it would be all that was required to set things back 'on track' for some further price falls.
Please, dear BOE, be good next week...

zag2me

May 8 2006, 01:36 PM

QUOTE(frugalista @ May 2 2006, 06:45 PM) [snapback]365219[/snapback]

Last August's rate cut -- it only knocked a few quid off the average mortgage, but the psychological effect was much bigger. Estate agents, IFAs, lenders and others could point to it and say, "look, interest rates are coming down".

Similarly, if the next move is up by 0.25%, it will only add a few quid to the average mortgage, but the effect on sentiment could be bigger.

Discuss.

frugalista

Totally agree, I have a mortgage tracker and a rise would hit me in the pocket for 30 quid a month but I wouldnt mind so much. What would be great is the psycology of it 6 months later in asking prices and hopefully some stagnation in the market so I can trade up.

frugalista

May 8 2006, 02:02 PM

QUOTE(Stressed-Out @ May 2 2006, 09:37 PM) [snapback]365413[/snapback]

I've been praying for a 0.25% IR cut since December 2005.
All of the HP falls we saw from Autumn 2004 to Summer 2005 were down to quarter per cent IR rises. The market is so volatile it would be all that was required to set things back 'on track' for some further price falls.
Please, dear BOE, be good next week...

Explain how a cut would help lower prices!

frugalista

BillyShears

May 10 2006, 08:03 PM

QUOTE(frugalista @ May 2 2006, 06:45 PM) [snapback]365219[/snapback]

Last August's rate cut -- it only knocked a few quid off the average mortgage, but the psychological effect was much bigger. Estate agents, IFAs, lenders and others could point to it and say, "look, interest rates are coming down".

Similarly, if the next move is up by 0.25%, it will only add a few quid to the average mortgage, but the effect on sentiment could be bigger.

Discuss.

frugalista

It's not just the direction of interest rates that's important. It's the "the government won't allow a HPC to happen" psychology as well that I think was boosted by the rate cut. A rate rise, followed by some misery followed by another rise could make all the difference to sentiment. And if the UK IR graph starts looking as upwardly mobile as the US one ....

Billy Shears