Today, however, the Bank of England is doing the opposite. Despite ongoing economic weakness, a cost-of-living crisis, stagnant growth, unaffordable housing and rising business pressures, it has deliberately pushed real interest rates back into positive territory. The result is a transfer of income from borrowers to lenders and from ordinary households to those who already own substantial financial assets.
House prices are falling. Mildly, in nominal terms perhaps, a bit more in real terms, yet more as a multiple of incomes. So, positive real interest rates are aiding in solving that unaffordable housing thing, no?
Yet Spud whines.
He’s a week late with the interest rate whine this month. Probably spending too much time being stopped on the street by doctors, astronauts and other really important people who all think he’s great.
Oh, my!
Note that none of these are concrete. He tries to scare with reification fallacies.
And all of which are direct consequences of government policies
His only investment is losing money. Cue whine.
Maybe he over leveraged to buy those oil futures?
A rise in real interest rates *reduces* the value of those “substantial financial assets” …
Murphy refuses to believe that discount rates affect the present value of future cash flows. Maybe that is why he failed to make enough money as an accountant to pay his bills in retirement?
OT, but this is delicious:
South Africa’s President Cyril Ramaphosa has addressed the nation to announce a raft of new measures to crackdown on illegal migration as tensions rise over anti-foreigner marches and frustrations about high unemployment.
https://www.bbc.co.uk/news/articles/cwyd50g0y5zo
Dem waycists, dem sud bros…
cackdown is a noun. you need a verb there, such as crack down.
Thanks for the pendantry!
A third case: Jill Biden told Hunter to put the crack down.
When I was on a project in J’burg in ’99 there were complaints about the number of black Zimbabweans who were illegal immigrants, and that was from the ex MK/ANC guys I was working for.
I see I must repeat once more that the ‘affordability’ of housing (certainly for the first time buyers we’re meant to be so concerned about) is largely determined by the cost of the mortgage needed to purchase it, not the ‘sticker price’ in the estate agent’s window. So increased interest rates tend to reduce house prices, while increasing mortgage costs. I don’t suppose it’s a total wash, but any resultant difference must be relatively small.
Generally true, but things are skewed in US today. Prices are high, and interest rates are high.
Possibly a bit more difference than you’re thinking, because the affordability is probably based more on the total monthly mortgage payment, but the inflation calculation only uses the interest portion, not the repayment.
When I first got our mortgage – early 1990s – the interest rate was 15% and we were paying £200 a month.
We just managed to miss the *base* *rate* being 15%. We were on something like 5% over base. Within a year base rate had dropped to 6% and we were on 10%.