Finally, some good news for buyers and movers: lenders lower borrowing rates, investors predict lower BoE base rate than recent doomsday type predictions

GasPanic · 20/07/2023 13:33

Yes, noticed that the 2 and 5 year gilt prices (good proxy for mortgage rates) have been coming down over the last few days, mostly because of a positive inflation report. Still inflation is running at about 8% which is very high. I doubt whether the BOE will take its foot of the gas for base rate increases and provided no other significant news (for example the Fed doing another big raise) I would guess 0.25% for the next rise, but hard to tell how that will feed into actual rates.

Original poster

KievLoverTwo · 20/07/2023 13:41

GasPanic · 20/07/2023 13:33

Yes, noticed that the 2 and 5 year gilt prices (good proxy for mortgage rates) have been coming down over the last few days, mostly because of a positive inflation report. Still inflation is running at about 8% which is very high. I doubt whether the BOE will take its foot of the gas for base rate increases and provided no other significant news (for example the Fed doing another big raise) I would guess 0.25% for the next rise, but hard to tell how that will feed into actual rates.

I agree. Where do you go to monitor gilt rates?

OP posts:

GasPanic · 20/07/2023 13:58

Here

https://uk.investing.com/rates-bonds/european-government-bonds?maturity_from=10&maturity_to=310

UK is at the bottom.

They seem to have some sort of adblock/registration stuff but varies a lot as to whether you can actually get round it. I don't have any issues getting it to work atm.

European Government Bonds Yields - Investing.com UK

Current data on European government bond yields, including the yield, daily high, low and change% for each bond.

https://uk.investing.com/rates-bonds/european-government-bonds?maturity_from=10&maturity_to=310

Blackbyrd · 20/07/2023 14:04

Surely we can agree that houses are massively overpriced currently, and we have a generation essentially locked out of home ownership due to income/house price ratios. What can be done to ensure intergenerational fairness if there is no family wealth to act as a subsidy? Apart from anything else, the country cannot afford to keep subsidising rents to the tune of tens of billions a year, let alone condoning the profits some landlords are making

onefinemess · 20/07/2023 14:38

Blackbyrd · 20/07/2023 14:04

Surely we can agree that houses are massively overpriced currently, and we have a generation essentially locked out of home ownership due to income/house price ratios. What can be done to ensure intergenerational fairness if there is no family wealth to act as a subsidy? Apart from anything else, the country cannot afford to keep subsidising rents to the tune of tens of billions a year, let alone condoning the profits some landlords are making

No, there literally is no such thing as "overpriced", whatever that means.

The marked dictates the price, so nothing can ever be "overpriced", just market price. People paid what they paid based on the market price. The fact that you might disagree is irrelevant.

People tend to have their heads in a bucket when it comes to house prices, they assume all homes are mortgaged and everyone is a pay check away from a missed mortgage payment.

Only 30% of UK homes are mortgaged, and of those, only a tiny percentage are owned by "distressed" buyers. The vast majority of mortgage holders have no problems making their payments, whatever the rates. This idea that a few repossessions will somehow crash the value of the rest of the market is nonsense.

The market dictates prices based on peoples willingness to sell at a particular level. As the vast, vast majority of UK homes are owned by people in no rush or need to sell, therefore they WILL NOT sell at a price less than they are comfortable with.

People can't buy homes that aren't for sale (which accounts for the majority of them) therefore the small pool of available homes are being chased by numerous buyers. And the recent rent reforms have slashed the number of rentals available, thereby driving even more people towards buying.

The only thing that will make the market adjust will be more for more houses to be made available, which would would have to be built in HUGE numbers. And that's not going to happen.

mathis2006 · 20/07/2023 14:55

@onefinemess so why are house prices dropping then? The houses that need selling due to death, divorce ect are the one dictating the market price, not the ones not up for sale.

Original poster

KievLoverTwo · 20/07/2023 15:03

GasPanic · 20/07/2023 13:58

Here

https://uk.investing.com/rates-bonds/european-government-bonds?maturity_from=10&maturity_to=310

UK is at the bottom.

They seem to have some sort of adblock/registration stuff but varies a lot as to whether you can actually get round it. I don't have any issues getting it to work atm.

Cheers for that.

OP posts:

Aloci · 20/07/2023 16:03

onefinemess · 20/07/2023 14:38

No, there literally is no such thing as "overpriced", whatever that means.

The marked dictates the price, so nothing can ever be "overpriced", just market price. People paid what they paid based on the market price. The fact that you might disagree is irrelevant.

People tend to have their heads in a bucket when it comes to house prices, they assume all homes are mortgaged and everyone is a pay check away from a missed mortgage payment.

Only 30% of UK homes are mortgaged, and of those, only a tiny percentage are owned by "distressed" buyers. The vast majority of mortgage holders have no problems making their payments, whatever the rates. This idea that a few repossessions will somehow crash the value of the rest of the market is nonsense.

The market dictates prices based on peoples willingness to sell at a particular level. As the vast, vast majority of UK homes are owned by people in no rush or need to sell, therefore they WILL NOT sell at a price less than they are comfortable with.

People can't buy homes that aren't for sale (which accounts for the majority of them) therefore the small pool of available homes are being chased by numerous buyers. And the recent rent reforms have slashed the number of rentals available, thereby driving even more people towards buying.

The only thing that will make the market adjust will be more for more houses to be made available, which would would have to be built in HUGE numbers. And that's not going to happen.

Show quote history

It's a collaboration of both a seller and buyer agreeing on the transaction price together, afterall, a seller can request any amount as the purchase price for their property, but until they actually sell it, its just a figure with no substance.

And regarding too many people chasing too few properties currently, well, Rightmove has so many available properties in so many of the areas I'm monitoring. And so many reductions! Why aren't these being snapped up if so many people are chasing too few homes?

GasPanic · 20/07/2023 16:43

House prices are underpinned by affordability.

Affordability has recently been affected dramatically by mortgage rates increasing and cost of living inflation which is not matched by similar wage inflation.

Prices will drop if people have less money available to buy. Because if they can't get the money from the banks where exactly is it supposed to come from ?

Prices are already dropping in real terms because prices are static or falling and inflation is up at 8%.

None of this is rocket science.

kidcrazy · 20/07/2023 16:45

GasPanic · 20/07/2023 13:33

Yes, noticed that the 2 and 5 year gilt prices (good proxy for mortgage rates) have been coming down over the last few days, mostly because of a positive inflation report. Still inflation is running at about 8% which is very high. I doubt whether the BOE will take its foot of the gas for base rate increases and provided no other significant news (for example the Fed doing another big raise) I would guess 0.25% for the next rise, but hard to tell how that will feed into actual rates.

Heading back up today.

Aloci · 20/07/2023 16:58

GasPanic · 20/07/2023 16:43

House prices are underpinned by affordability.

Affordability has recently been affected dramatically by mortgage rates increasing and cost of living inflation which is not matched by similar wage inflation.

Prices will drop if people have less money available to buy. Because if they can't get the money from the banks where exactly is it supposed to come from ?

Prices are already dropping in real terms because prices are static or falling and inflation is up at 8%.

None of this is rocket science.

I absolutely 100% agree with you.