General (main property discussion here) - Rates falling to 4.25%?

City economists are predicting no more hikes this year and that rates are likely to fall early next year. Perhaps eveb 4.25% by middle next year.

Thoughts?

I don't concur with the idea of declining rates. The MPC are far too worried about giving the housing market more room for rising prices and despite the lower than expected GDP figures oil prices are still a concern for inflation.

Though I don't think rates are going go much higher.

Phil

As I have mentioned declining rates will only fuel the housing market and this can only be dangerous.

Hope so. I am currently 30% variable on borrowing. Camn only hekp returns.

I think the government is becoming increasingly worried by the current credit boom and may be forced to keep rates low to avoid repos, bankruptcies etc.

It comes down to the inflation measure they're targeting too.

The current measure is CPI I think, which conveniently leaves out house prices, mortgage repayments and rent. Hence inflation ticking over well below target, so rates can't increase in short term according to their MO.

If they switch back to RPI it might be another story, but would they not consider it a bad sign in terms of confidence to bring rates back down so quickly?

2% eurozone and US you'd think were unsustainable in the other direction.

I'm not sure where Japan are right now, but globally we must have one of the highest interest rates of mature economies.

anyone bought/would consider buying in japan? good or bad idea??

i have a contract to go out there for 3 weeks in a couple of weeks time and might have a look into real estate.

i would love some help on background info, not sure where to look for research.

Jo, take a look under the Overseas thread within this forum as this topic has already been discussed.

Julian

Christmas sales may decide what happens here as they will provide the bank with a good indication as to the strength of the consumer as well as inflationary pressure.

Owen

Good point Owen. Christmas are going to be crucial.

Julian

more and more people talking about this fall in rates.......im hoping!

sorry to re-start an old thread but whats everyone's view at the moment?

tom

I feel BofE very relieved to have stemmed the housing boom and know that if rates fall prices might boom.

I think they are comfortable with the economy ticking while housing stagnates.

Must say their policy has worked very well so far.

Christmas sales were not good....flat or down 0.25%. Not going up.

My guess is rates will stay where they are for the next few months.

Owen

I was reading (in the FT I think) that post Christmas sales are about to pick up significantly.

Theory being that consumer is still holding out for further bargains and savvy store-owners aren't discounting as much as they might in response to this.

Then again I also read that we can expect sales / discounting all through this year!

So who knows. I don't see significant inflationary pressure at the moment though (especially given how they calculate it).

John