I think it is going to get ugly here too... once the debt problem is fully appreciated and folks are forced to retreat. And there will be little or nothing Alan can do about it... and a few late rate cuts won't fix this mess, this debt bubble.
I bet it gets worse here than in the UK when it is all said & done... they might have it bad first but we'll match & raise them before the hand is called. IMHO.
fester, the BoE meets more frequently than the FED (every month) so they probably don't need to take action between meetings. The next meeting is August 3rd & 4th. I'm sure they could lower rates between meetings if they felt it was necessary.
Variable rate mortgages are directly affected by the BofE rate. e.g. you can have a mortgage that is 'BofE rate + 1%' and it varies exactly with it. You can get fixed rates or capped mortgages, but these are usually 2 to 5 year deals with pre-payment penalties. There is no equivalent of the 30 year or 15 year fixed rate.
MadJock, Thanks! I knew it was different from the States. Maybe they should try no money down negative amortization loans in the UK. That would help their housing market. ROFLOL.
No problem. I just want to clarify that there is not just the one type of mortgage in the UK (such as BofE +1%) - that value of 1% can be fixed, but can also vary slightly (e.g. 0.8% when they're feeling in need of business or 1.2% when they want to screw the consumer, and they may delay falls in rates for a week or two, so it's not an instantaneous change unless the mortgage specifically states that). There are also capped mortgages, discount mortgages and so on.
Here's an example of 'tracker' rates. The deals usually change every 2 weeks to a month, whenever the fund set aside for that deal is used up.
UK mortgages have got a little better in recent years. It used ot be the most common was an 'endowment mortgage' where you paid interest only to the bank for the term of the loan, but invested in a managed fund that ideally will pay off the capital at the end. There was a big endowment mis-sellings scandal in the 80s though, where the big funds had conned the consumer, and many weren't paying off the loans at the end of the 25 years. Now it's more tightly regulated and more people go with 'capital and interest' type mortgages, and also ones where the interest is calculated on a daily, not yearly, basis.
Nice post as usual.
I think it is going to get ugly here too... once the debt problem is fully appreciated and folks are forced to retreat. And there will be little or nothing Alan can do about it... and a few late rate cuts won't fix this mess, this debt bubble.
I bet it gets worse here than in the UK when it is all said & done... they might have it bad first but we'll match & raise them before the hand is called. IMHO.
I wonder when those declining house prices and weakening economic conditions will start to impact employment.
And then came the bombs.....
BoE held rates at 4.75%.
Does the BoE have a more direct effect on mortgage rates in England than the Fed has in the US?
Can the BoE change rates between meetings if they want to flood their market with liquidity (ala the US Fed post-9/11) or will this be a delay
fester, the BoE meets more frequently than the FED (every month) so they probably don't need to take action between meetings. The next meeting is August 3rd & 4th. I'm sure they could lower rates between meetings if they felt it was necessary.
sw, I don't know enough to answer your question.
Best to all.
Variable rate mortgages are directly affected by the BofE rate. e.g. you can have a mortgage that is 'BofE rate + 1%' and it varies exactly with it. You can get fixed rates or capped mortgages, but these are usually 2 to 5 year deals with pre-payment penalties. There is no equivalent of the 30 year or 15 year fixed rate.
MadJock, Thanks! I knew it was different from the States. Maybe they should try no money down negative amortization loans in the UK. That would help their housing market. ROFLOL.
Best Wishes.
No problem. I just want to clarify that there is not just the one type of mortgage in the UK (such as BofE +1%) - that value of 1% can be fixed, but can also vary slightly (e.g. 0.8% when they're feeling in need of business or 1.2% when they want to screw the consumer, and they may delay falls in rates for a week or two, so it's not an instantaneous change unless the mortgage specifically states that). There are also capped mortgages, discount mortgages and so on.
Here's an example of 'tracker' rates. The deals usually change every 2 weeks to a month, whenever the fund set aside for that deal is used up.
http://www.halifax.co.uk/mortgages/pdf/Homemover.pdf.pdf
UK mortgages have got a little better in recent years. It used ot be the most common was an 'endowment mortgage' where you paid interest only to the bank for the term of the loan, but invested in a managed fund that ideally will pay off the capital at the end. There was a big endowment mis-sellings scandal in the 80s though, where the big funds had conned the consumer, and many weren't paying off the loans at the end of the 25 years. Now it's more tightly regulated and more people go with 'capital and interest' type mortgages, and also ones where the interest is calculated on a daily, not yearly, basis.
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