Repossessions to rise when interest rates go up

[marty21]

http://www.guardian.co.uk/business/2011/jun/27/house-repossessions-wave-interest-rates-rise

Interest rates can't stay at record low levels for ever - when they do increase - mortgage payments will shoot up - and given the current economic situation - people will not be able to afford the increased mortgages and lose their homes

BTL landlords will no doubt increase their rents to cover their own increased mortgages -

not looking good

 

[Balbi]

Bears to shit in woods following heavy meal

Richard Banks, the chief executive of UK Asset Resolution (UKAR), the body that runs the £80bn of mortgages bailed out by the taxpayer during the banking crisis, also said in an interview with the Guardian that the Labour government's pleas at the start of the crisis for lenders to keep families in their homes was forcing some homeowners further into debt.

In a warning that the industry may have been too lenient with some of its customers, he said he believed a policy of "tough love" would be fairer to people facing long-term difficulty in keeping up payments on loans taken out when house prices were at their peak and personal incomes on the rise.

Tough love = turf them out.

 

[fractionMan]

'tough love' lol.

fucking hell

 

[weepiper]

Banker in 'totally different definition of love to the rest of the world' shocker.

 

[kabbes]

Interest rates can't stay at record low levels for ever

Tell that to the Japanese.

 

[kabbes]

For the record:

 

[marty21]

Tell that to the Japanese.

true, are we as fucked as them?

 

[kabbes]

true, are we as fucked as them?

In what way are we doing better?

 

[marty21]

In what way are we doing better?

no idea tbf

 

[Santino]

Stock prices have reached what looks like a permanently high plateau.

 

[kabbes]

There is an assumption that there is this kind of "natural" interest rate level of somewhere around 6%. But why? What law of the universe dictates this? Why shouldn't the natural level be 1% instead?

 

[Santino]

Yeah, but I found a cool quotation to quote.

 

[kabbes]

Yeah, but I found a cool quotation to quote.

That's what your mum said.

 

[love detective]

There is an assumption that there is this kind of "natural" interest rate level of somewhere around 6%. But why? What law of the universe dictates this? Why shouldn't the natural level be 1% instead?

why should there be a 'natural' level at all?

 

[kabbes]

why should there be a 'natural' level at all?

Well quite. I meant to add that, actually, and forgot. So cheers.

 

[SpookyFrank]

There is an assumption that there is this kind of "natural" interest rate level of somewhere around 6%. But why? What law of the universe dictates this? Why shouldn't the natural level be 1% instead?

Because thanks to our ridiculous consumer society we cannot be trusted to use money sensibly and so must be prodded and cajoled into behaving ourselves using interest rates. And if interest rates are perpetually low then there's nowhere to go if you want to nudge people into borrowing and spending more money. Maybe the Japanese are simply more sensible, or maybe the Japanese state just gives its people a little more credit.

 

[littlebabyjesus]

true, are we as fucked as them?

Are they fucked? They've had interest rates hovering just above zero and very low growth for two decades, but that is from a starting point of considerable wealth. Like the UK, most of Japan's national debt is owed to Japanese people/organisations, so it's not really a 'national debt' as such at all.

But yes, I came on here to say the same as kabbes. When Japan's interest rate plummetted, everyone thought it had to be temporary there too. It is anachronistic for any govt to lend at a lower rate of interest than it borrows at, which is the current state of affairs, but nobody can say when this situation will change. All we can say for sure is that it won't be changing in the foreseeable future, which is no more than six months at the moment, I would say. Anyone claiming different - and various 'expert's do regularly claim to know - is lying.

 

[littlebabyjesus]

Because thanks to our ridiculous consumer society we cannot be trusted to use money sensibly and so must be prodded and cajoled into behaving ourselves using interest rates. And if interest rates are perpetually low then there's nowhere to go if you want to nudge people into borrowing and spending more money. Maybe the Japanese are simply more sensible, or maybe the Japanese state just gives its people a little more credit.

Nah. The Japanese Govt has been dying to raise rates for years, but every time they try, demand falls so they have to cut them again. That could well happen here - we can't know, although the situation seems pretty similar - so when they do try to put rates up, they could just come straight back down again. Where there is a difference between the UK and Japan is in the relative strength of their currencies - despite their low interest rates, the yen remains strong. The pound is relatively weak at the moment - that's will be the main driver to putting rates up: not to curb overborrowing, but in an attempt to strengthen the pound. As ever, there are pluses and minuses economically to a strong/weak currency. That's why theses decisions are always political, not in any way 'scientific'.

 

[kabbes]

For over three years, I've been told by "experts" -- and by "experts" I mean bond traders and investment bankers of my personal acquaintance, so make of that what you will -- that interest rates are definitely going up any day now. I couldn't see it then and I can't see it now. There are no macroeconomic conditions that are conduicive to imminent rises in interest rates. As per lbj, expect flat rates for six months and nobody has a scooby what will happen after that.

 

[SpookyFrank]

Nah. The Japanese Govt has been dying to raise rates for years, but every time they try, demand falls so they have to cut them again. That could well happen here - we can't know, although the situation seems pretty similar - so when they do try to put rates up, they could just come straight back down again.

Yeah, I thought my theory about the state giving its people credit was a little far fetched.

I could easily see something simillar happening here, particularly as the current crop of jokers running the bank seem incapable of sticking to their guns or acting according to a coherent plan. What with the VAT hike, falling wages, rising inflation, ludicrous energy and petrol costs and the deeply unfortunate unionisation of call girls costing us all a packet an interest rate rise could easily be the final nail in an already fairly nail-heavy coffin.

 

[tommers]

bond traders and investment bankers of my personal acquaintance,

Burn him, Urban!

 

[kabbes]

Burn him, Urban!

Oh, I think urban already knows of the murky capitalist waters in which I swim. I just about get away with it for now by loudly decrying everything about it but I don't think it's going to save me come the revolution.

 

[frogwoman]

we're going to nationalise you.

 

[tommers]

we're going to nationalise you.

That's one way of putting it.

 

[littlebabyjesus]

we're going to nationalise you.

 

[kabbes]

*Cups hands protectively over his nationals*

 

[Crispy]

we're going to nationalise you.

You'll have to slice him pretty thinly for everyone to get a piece.

 

[tommers]

oh, we have a laugh, don't we?

 

[frogwoman]

You'll have to slice him pretty thinly for everyone to get a piece.

 

[Ae589]

For over three years, I've been told by "experts" -- and by "experts" I mean bond traders and investment bankers of my personal acquaintance, so make of that what you will -- that interest rates are definitely going up any day now. I couldn't see it then and I can't see it now. There are no macroeconomic conditions that are conduicive to imminent rises in interest rates. As per lbj, expect flat rates for six months and nobody has a scooby what will happen after that.

The only reason to do that is if they are forced to to defend the pound, isn't it? It doesn't look like they care about the pound. What reason did they give?