Carney tells UK rates may rise this year

[DimPrawn]

The income multiple guards are for new buyers what about all the people who already are leveraged to the hilt, when interest rates go up they will default or try and look for a better rate, but then be denied die to leverage they require. I'm on 50% LTV with small mortgage so can get great rates but a rate rise could trigger a crisis for others.

Any crisis will be a banking crisis, and the banks will not allow it.

Rates will rise when it doesn't affect the banks balance sheets.

Banks first, people second.

[Doggy Styles]

I'm not convinced by the income multiple cap. Essentially, as I see it, there is a lot of cash sloshing around in London where I work and always has been, even through the credit crunch. By capping income multiples, this is going to give cash buyers even more of an advantage. A lot of transactions in London are by cash rich foreign investers and this would play directly into their hands.

The alternative is to continue allowing people to borrow increasingly more than is good for them.

There are already plenty of mortgage-holders who are going to be hurt when interest rates rise again, some posting in this very organ.

Cash-buyers aren't a problem, they can afford it.

[ZARDOZ]

When will people realise this housing boom is just making people poorer? Less disposible income, less spent in the wider economy. People with middle incomes who can't make ends meet. Higher and higher first time buyer age resulting in kids who don't leave home until their 30s or 40s! Less and less value for money. Quick buck constrction firms lobbying the gov to build on the green belt and destroying rural communities.

If your house was worth 100k instead of 400k is that a bad thing if the wider market is the same? It's all relative when you come to move.

[rd409]

When will people realise this housing boom is just making people poorer? Less disposible income, less spent in the wider economy. People with middle incomes who can't make ends meet. Higher and higher first time buyer age resulting in kids who don't leave home until their 30s or 40s! Less and less value for money. Quick buck constrction firms lobbying the gov to build on the green belt and destroying rural communities.

If your house was worth 100k instead of 400k is that a bad thing if the wider market is the same? It's all relative when you come to move.

The housing boom is not just because of the shortage of the home(s). There are still plenty of houses around tbh. The problem is everybody wants to live in a particular area only. No one wants to buy a cheaper house in area with not so good schools, and jobs. When I bought in my area, the houses were still difficult to shift. Only in last 6 months, there is a bidding war started by buyers. So many people have been outbidded from their offers for some time now, that they have started doing the same. For every house that comes on market, there are 70-80 viewings on the very first weekend, and the seller receives 15-20 offers to choose from on the Monday.
Problem is every one thinks that the market can only go one way, and that is the reason, buyer are not shying away from offering above the asking price. It is going to be political suicide for any party to increase the base rate more than 1% though. This is a gravy train with no brakes, so fill your boots

[ZARDOZ]

The housing boom is not just because of the shortage of the home(s). There are still plenty of houses around tbh. The problem is everybody wants to live in a particular area only. No one wants to buy a cheaper house in area with not so good schools, and jobs. When I bought in my area, the houses were still difficult to shift. Only in last 6 months, there is a bidding war started by buyers. So many people have been outbidded from their offers for some time now, that they have started doing the same. For every house that comes on market, there are 70-80 viewings on the very first weekend, and the seller receives 15-20 offers to choose from on the Monday.
Problem is every one thinks that the market can only go one way, and that is the reason, buyer are not shying away from offering above the asking price. It is going to be political suicide for any party to increase the base rate more than 1% though. This is a gravy train with no brakes, so fill your boots

Well you hot the nail on the head, there is no shortage of homes. There are just shortages in popular places, but this is also due to speculation, including some dirty money from Russia at the top end. It's not simply housing needs. The behaviour you describe would not happen without the expectation of a get rich scheme.

The cheapness of money is primarily fuelling the wider market. The simple solution is to make money more expensive. They should have done it a decade ago when the first boom was getting unreasonable. But they let it run and run until the banking crisis curtailed it a little.
It's worth noting that for every housing boom in the UK there had been a bust, e.g. most recent history being early 70s boom and late 80s boom. The difference this time is the government are prioritising proping up the housing market over the health of the wider economy. Wages are being restrained while the cost of living is rising yet a boom continues, how can that make any sense? Something will have to give eventually. Making a few people rich is moot if the UK economy ends up seriously fooked. Osborne talking about growth which has been fuelled by his boom is somewhat ironic and doesn't fool anyone.

I speak as someone who did OK out of the oo's boom, but I'm not stupid enough to think it's great if this carries on.

[OwlHoot]

The income multiple guards are for new buyers what about all the people who already are leveraged to the hilt, when interest rates go up they will default or try and look for a better rate, but then be denied die to leverage they require.

They'll need a squeaky clean credit history, with no missed payments on their mortgage or credit cards for literally years, and no sign of maxed out credit or even a trend of decreasing their available credit. So probably a large proportion of people needing to remortgage will be declined.

[mudskipper]

Mortgage? Aren't you lot contractors?

[rd409]

Mortgage? Aren't you lot contractors?

When debt is cheap, who spends their own money?

[VectraMan]

Well you hot the nail on the head, there is no shortage of homes. There are just shortages in popular places, but this is also due to speculation, including some dirty money from Russia at the top end. It's not simply housing needs. The behaviour you describe would not happen without the expectation of a get rich scheme.

Lots of houses tied up as rentals. I think if the government is going to interfere in the free market (and I'm not necessarily saying they should), something that favoured people who want to buy to live over BTL'ers would be a better thing than "help" to buy. I wouldn't mind buying the house that I rent if the Landlord could be pursuaded to get out of the way via higher taxes or some other scheme. So I don't need a new house building, or somebody to free up an existing house, just a transfer of ownership of my existing one. If a lot of people could do that then that would reduce a lot of the demand on the housing market.

[DimPrawn]

When debt is cheap, who spends their own money?

WHS.

IT Contractors don't speculate on property, banks do. Free money and easy leverage means you get rich, or the bank dies trying.