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Has the buyer's bubble burst?
Former Member
Posts: 1,876,323 The Mix Honorary Guru
Interest rates are steadily going up, more people and firms are struggling with debt, money is becomming harder to get hold of - surely this signals a reduction in spending, which leads to Debenhams having to lay off staff to cut costs...
Or at this stage is that just hysteria? I genuinely think we are headed for a market... whats the word... normalisation? Inflation, particularly in house prices, has made people value things such as property much more than they are actually worth. Now people are thinking again it's going to stop people spending money and locking it away until the all clear comes out. Which means - buying / lending bubble will burst.
Or at this stage is that just hysteria? I genuinely think we are headed for a market... whats the word... normalisation? Inflation, particularly in house prices, has made people value things such as property much more than they are actually worth. Now people are thinking again it's going to stop people spending money and locking it away until the all clear comes out. Which means - buying / lending bubble will burst.
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Even the Northern Rock hype is over inflated.. only for the time being, I do believe we are going to see massive problems..not quite yet though.
And don't expect the goverment to sit by and watch the prices tumble as fast as they rocketed, they, and their middle/upper class voters will not like a massive property tumble.
With regards to interest rates, they held this month, as expected, not risen? Probably going to stay the same with the way the markets are..except for one deadly twist, if they bail out the other banks like they did Northern Rock, inflation is going to rocket, and then the rate rise will start again.. but its all swings and roundabouts really..
I don't see a major price tumble in a country where demand still outstrips supply. I imagine the new developments of executive flats, targeted directly at buy-to-let investors, will suffer a big bump but proper houses for proper people won't revise very far downwards, if at all.
kermit my man you are talking a load of balls, if banks won't lend to each other that is a liquidity problem, why do you think 3 month libor has shot up and the central banks have been pumping billions of dollars in repo loans to keep it going, the investment banks start reporting earnings this week and the figures won't be pretty, let's wait and see....
oh and btw looks like A+L are going down the crapper with NR, my bet is B&B are next...:wave: but everything's backed by the BoE so don't panic!
I think your predicitions of doom and gloom are a tad overstated.
NR that is fundamentally sound... However what should have been a short term problem is being exxagerated by people panicing and getting their cash out (and the majority are taking out money which is 100% protected) NR haven't even had to use their cash they borrowed.
That said the NR shares are going down so fast, that the bets are that one of the other banks are going to get them cheap and make lots of money from the mortgages held by NR.
I set up my trading account today
If you take HSBC for example, they lend on the money that is held in savings, something NR didn't have enough savings to cover.
The money requested is so they can KEEP LENDING, not to cover the money that has currently gone out etc..
We live in a panic/sheep society, its quite sad really.
Maybe, maybe not, the problem with NR is that its given out lots of low interest loans in the UK, now even if the share price keeps falling taking on that debt which is only paying a very low return isnt very attractive.
But, in real terms this wasnt cased by the UK market, its because NR bought more of the dodgy US loans than other UK banks.
True, however its a lot more customers for whoever takes them over. OK the low interest loans may not make much in the short term. However, fixed rates don't remain fixed rate forever and its possible for the new bank to change the rate to a higher level and bet that the majority of people don't move.
Certainly, and I think if the price drops low enough then someone will have a go, but it might not be a good idea at really any price - you have to have funds to give out and you've got to get them from somewhere - which is exactly what banks cant do at the moment.
The shares would have to go low enough to make it really worthwhile, but many of the High Street banks (ie those who weren't building socieites) rely much less on loans from others and more on accounts, and aren't being hit as hard.