Energy Prices (Strictly NO referrals!)

[purplesky]

What are you saying here? The avg property in the UK is valued about £275k. The crash in 2008 was somewhere in the region of 10-15%, do you think we're going to see a 20% + crash?

Thing is, a 10 to 20% crash isn't going to cut it. QE and ultra low interest rates have completely distorted the market, and fair value is probably 50% or more.

2008 was about saving the banks. Today, banks are relatively safe. Ordinary people won't get any help though, and I expect banks to repossess, maybe with the option of renting said house back to the defaulter. This would be a very soft option, but theoretically could work as interest rates continue to climb and QT progresses.

 

[silversurfer]

People have been helped for years, my perspective is from the 90's till now everyone is relatively spoilt. Obviously some costs rise on purpose you are screwed as a smoker etc. but overall the context is I think we revert to the long term norm of harsher hard money policy which will be felt its not really avoidable so far as I know.
Correct interest rates is about 5% and millions benefitted from the easy money given out below that. The part that is going to hurt is the market is elastic it can only be pushed so far and 1% rates for this period of time is close to ridiculous policy historically. e.g. A quarter of UK debt is tied to inflation, they cannot resist raising rates (long term) and gov will have less money in its fiscal budget eventually so forget politics and complaining or voting different just the maths says eventually people will receive less help then they've had the last five years.

 

[purplesky]

US Federal Reserve - have now just increased rates by 0.75%

 

[MadMossy]

US Federal Reserve - have now just increase rates by 0.75%

Yep, largest increase in interest rates in over 30 years. So give it 6 months and we will start to see an increase in repossessions and bankruptcy while triggering even further economic problems.

 

[Freakbro]

Wonder if the BoE will do a 0.5% rise tomorrow off the back of that

 

[purplesky]

Well, time is rapidly running out for the BofE.
They should be matching the Fed's 75 basis points, but will they try and chicken out with 25 or go for a more neutral 50?
What is clear though is that the Fed are going to be doing more of these 0.75% raises so the BofE haven't got much rope at this point.

 

[purplesky]

BofE heads are on a chopping block.
Made policy error after error since 2008. Had multiple opportunities to correct, and now here we all are. The Fed realised their mistakes and are acting - late, but finally.

If the BofE don't keep up, everyone should look forward to food and energy prices 3 or 4 times today's cost. All whilst living in their £5M house of course.
Tik Tok.

 

[Freakbro]

What is clear though is that the Fed are going to be doing more of these 0.75% raises so the BofE haven't got much rope at this point.

Powell said that a 0.75 rise wouldn't be done often, but they were looking at a 0.5 - 0.75 rise at the next meeting.

You would assume that's got to drag the £ rate up with it, else it's going to slide even worse against the $

 

[throwaway4372]

quit fearmongering, there's enough of that in the news

 

[purplesky]

Powell said that a 0.75 rise wouldn't be done often, but they were looking at a 0.5 - 0.75 rise at the next meeting.

You would assume that's got to drag the £ rate up with it, else it's going to slide even worse against the $

Interestingly, the GBP is up over 1% against the USD. OK it's been up all day, but has increased further since the Fed decision.
Maybe someone knows the BofE are going to act hard tomorrow?

 

[200sols]

Interestingly, the GBP is up over 1% against the USD. OK it's been up all day, but has increased further since the Fed decision.
Maybe someone knows the BofE are going to act hard tomorrow?

It's a typical 'buy the rumour sell the news' thing. 0.75 increase was already well priced in.

 

[purplesky]

quit fearmongering, there's enough of that in the news

I think people's fuel and food costs over the last few months are proof enough that there is, has not been, nor will there be any fearmongering.
Western countries all have to follow the Fed, the way it has always been. Looks like the ECB are trying to diverge which will not go well!

 

[purplesky]

It's a typical 'buy the rumour sell the news' thing. 0.75 increase was already well priced in.

Maybe. Next few months are going to be very interesting in the UK though, that's for sure. Probably not as interesting as what is going to happen in the Eurozone though.

 

[Uther]

Its going to be a particularly bad time to have debt or teetering on the edge with a mortgage...

 

[purplesky]

Its going to be a particularly bad time to have debt or teetering on the edge with a mortgage...

Thing is, the BofE can pussyfoot around all they like with 0.25% increases, it's just prolonging the agony. But what I think they really want is demand destruction whilst trying to maintain the housing market. It won't work though and will be another policy error to add to their list.

 

[Uther]

Thing is, the BofE can pussyfoot around all they like with 0.25% increases, it's just prolonging the agony. But what I think they really want is demand destruction whilst trying to maintain the housing market. It won't work though and will be another policy error to add to their list.

Both the FED and BoE have acted too slowly, so things are going to be painful.

 

[purplesky]

Both the FED and BoE have acted too slowly, so things are going to be painful.

My prediction for tomorrow is that they'll only go for 0.25%. And petrol at £2.10 will follow within a week.

 

[Richie]

quit fearmongering, there's enough of that in the news

@purplesky owns his house outright so doesn't care if huge interest rates cause issues to others.

Opinions are one thing and differing views should be welcomed (echo chambers are not constructive) but he's practically foaming at the zip over large and frequent rate increases.

 

[LabR@t]

I have pledged to pay my energy bill this month. They didn't seem to be happy don't know why ?

 

[b0rn2sk8]

How many people are on tracker mortgages with significant debt though?

As long as you are not up to your eyeballs with mortgage borrowing, you can deal with higher rates at the end of a fixed term by remortgaging over a longer period. While that is a sticking plaster at best, it might mean you can keep your house in the medium to long term.

Likewise your wages should be inflating away the actual debt to a certain degree.