Are They Going To Cut Rates Next Month

By Andy Shaw | January 23, 2010

Originally Posted 23rd October 2007

Please Note the questions says are they going to cut rates not should they cut rates!

The BoE’s minutes from the meeting were out this week, and one person out of nine actually voted for a rate cut. So it’s not looking good is it?

I’ve been having a discussion with my Economist friend and I was ridiculing the BoE for their lack of foresight and he was telling me that he believes that they are, to use his own words ’spectacularly clever’. The minutes did suggest that several bank officials would like to move swiftly, noting that “a precautionary reduction in Bank Rate could forestall a sharper slowdown in output growth”.

Now this is a good sign. And the fact that some members argued that if they did cut rates and the crisis eased they could raise them later. Now this is the right way of thinking, small adjustments rather than waiting until it’d definitely too late and they are having to overcorrect (like 5 rises in a year for example). Unfortunately the majority thought they would wait and see.

Well one of my many reasons for thinking they are less intelligent than I think the leaders of our economy should be is the way they manage the economy. For those who don’t know I’m a private pilot, I don’t fly anymore as I couldn’t get round to going up every 28 days so in the end I gave up trying.

Well I think the economy is like flying a plane, and a plane has a number of controls, the ailerons, the flaps, the rudder (cant remember if that’s the name it’s been so long!), the power, the wind (you don’t control that, but you can choose where you want to go- forces outside your control), and finally the trim. Applying very slight positive or negative pressure to most of those items alters the course.

When I was taught to fly, I was taught to make minor changes and then wait and see what happened, then make further minor adjustments to correct the course. If something in the weather started to look poor then I would take precautionary measures to try and remain on a comfortable course. The point was always to be in the precautionary state rather than the reactive state.

Well the BoE in my opinion flies the economy in the reactive state in other words they wait until they know it’s way off course before correcting instead of being able to feel that it is going off course and make a minor correction. What’s worse is the BoE flies this economy just by using the power alone! And that’s no way to fly a plane.

What does this mean for us? Rates will be kept too high for too long, just as they have been. My opinion is rates should be at 4.75 to 5.25% with the occasional push to 5.5%. So my prediction of a rate cut next month based on all the evidence that we are going off course obviously means I am reading the indicators wrong, so what do I know afterall they are the experts and according to my friend are spectacularly clever. As I’ve said before trying to predict a market is easy but trying to predict a group of people that really don’t seem to be seeing the same signs as me is really tricky. Still hopefully I’m wrong and they’ll look at a rate cut next month as a precaution!

Best wishes

Andy

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My Properties Are Losing Money Every Month

By Andy Shaw | January 23, 2010

Originally Posted 20th October 2007

I had this email the other day and I thought it and the answer may be of help.

Dear Andy,

I purchased and read your book recently and did act on it. I have bought 3 properties and will be letting my current house out once I have moved into a larger home in October. The only problem is that I will only be making a profit on my current house, the 3 new properties will all be loss making. I can handle these losses for awhile and hopefully rents will rise over time and interest rates decrease.

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House Prices Are 40% Overvalued According To The IMF

By Andy Shaw | January 23, 2010

Originally Posted 18th October 2007

I’m having a debate with an economist at the moment regarding how I think these guys and the Bank of England can’t predict the property market, because of several different reasons: -

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Topics: Property, The Economy | Comments Off

Crossfiring — Getting Property For Free — Able To Raise Money On Credit Cards – All Appears To Be A Load Of Teleological Semantics!

By Andy Shaw | January 23, 2010

Originally Posted 17th October 2007

I was asked this question by a member and I thought that it and more importantly my answer should be seen by as many people as possible so I added it to my blog:-

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Topics: Property, Wealth Creation | Comments Off

Is It Nearly Time Again For Us to Live Out Our One Day Of Democracy?

By Andy Shaw | January 23, 2010

Originally Posted 16th October 2007

Since 1979 we have lived in democracy for a total of seven days, are we about to have the eight day? For those of you that don’t know the rest of the time democracy is really just an illusion. But that’s for another time as we can’t change that system, or more accurately we can’t be bothered so what we have to do because of our apathy (I’m including me here :-) ) is to make the best of the bad situation.

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The Money Program – Buy To Debt

By Andy Shaw | January 23, 2010

Originally Posted 15th October 2007

The money program last week featured an episode asking is this actually the start of the buy to let bubble bursting. I saw this advertised on the BBC so I thought I had better watch it as I knew I’d be asked to comment.

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Topics: Property, The Economy | Comments Off

Get The Basics Right Before You Start

By Andy Shaw | January 23, 2010

Originally Posted 15th October 2007

I had the TV on the other night and I was sort of watching one of the Property TV shows. There were these two women looking for a flat which I think was in Glasgow.  They had not found anything suitable for 2 – 3 weeks then up came this flat. The camera changed to view them walking into the flat with the agent holding open the door.

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The Market Update

By Andy Shaw | January 23, 2010

Originally Posted 30th September 2007

I was watching Bloomberg the other day when the 3 month property prices were released and they were surprised that despite the financial problems with Northern Rock, the prices had actually gone up.

I mean think about it, the Northern Rock crisis hits the week before, and do they really expected house prices to be affected by it in that timeframe? You don’t even have to have the smallest amount of common sense to understand that you will not see information that reflects the Northern Rock effect for at least three months, more likely six months. And even that’s too soon, we’ll probably only know the actual affect after two to three years.

And for those that don’t understand why that is because you may be new to the site; to understand what is really going on with the market you have to look at it from a real position and put yourself in the position of buying a property. On average I would imagine it takes 12 weeks to complete a purchase, so there is no way we would see any effect in historical figures in less than 13 – 26 weeks. Therefore it makes what they have said ridiculous doesn’t it?!

But if most people were listening to this, they would be yet more confused because another professional body was helping to support the bad information that is everywhere in the property market. The problem is the city doesn’t understand the property market and they continue to demonstrate their lack of understanding of it with virtually every statement they make.

However, if you are able to recognise they don’t understand it then that’s a big advantage to you. As you act boldly in the face of what others think and pick up on the opportunities presented. The more of these so called experts that continue to support their incorrect predictions then the more it will become popular opinion and popular opinion is usually wrong. :-)

So don’t let the propaganda into your mind. These people are muppets when it comes to predicting the market or worse they are just putting their spin on it to sell headlines. To you it doesn’t matter, we are approaching some real deal times of the year. So continue to buy with confidence, remember you are not buying in the property market, you are just buying a property, and do your deal just on that property.

Best Wishes

Andy

Topics: Free Content, Property, The Economy | Comments Off

Buy To Let Landlords Are Enjoying The Fastest Rent Rises On Record

By Andy Shaw | January 23, 2010

Originally Posted 21st September 2007

Guess what? The prediction I made a few years ago is becoming a reality. I predicted that we would start to see upward rent rise pressure that would out perform the historical rates. It wasn’t a particularly difficult prediction as I knew that rents were already lower than they should be thanks to property investment landlords not applying adequate upward price pressure to their rents.

As I’ve mentioned before, there is always upward price pressure from the vendors when they sell their property, which makes estate agents increase the prices. But the landlord does not force rent up in the same way, as they are happier to rent it for a bit less just to get a tenant, which means that letting agents do not force up the prices.

The traditional increase has been 11.74% for property prices and 5.5% (approx) for rental prices. There are many reasons why rents have only increased at the 5.5% level, the other main one being affordability. But I expect over the next few years as investors need to increase the prices in order to get at their mortgage equity, we will find that this trend may actually out perform its historic level.

This is good news for investors from one point of view, but as such a large percentage of the population rent, that will raise the need for increased pay, which will raise inflation and this could mean higher mortgage rates. But that said, I think a balance will be struck. However, as there are so many areas across the country now with rents that are far lower than they should be, we will continue to see the headline rise out perform the historic trend. All this means is that we just have a price correction going on.

Now the new wave of buy to let investors are here and we are having to push up rents in order that we can release our equity, you can expect to see the upward rent trend continue for quite a while.

Andy

Topics: Free Content, Property | Comments Off

The Banks One Size Fits All System Is Racist

By Andy Shaw | January 23, 2010

Originally Posted 20th September 2007

Just using the word racist stirs up emotions and makes it uncomfortable for me to write about; this is just in case I say something that is politically incorrect, but then I’ve never really been politically correct anyway and I just say it the way I see it. Anyway I think after reading this article, you’ll have to agree they are being racist.

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