[Finance] Base rate increase.

[indy3050]

I know it’s a very difficult question to answer but has anyone an idea where we might be in 12-18 months time? I am very sorry for those who’s deals are ending here and now, it’s shithouse…

 

[Bozza]

I know it’s a very difficult question to answer but has anyone an idea where we might be in 12-18 months time? I am very sorry for those who’s deals are ending here and now, it’s shithouse…

In the February MPC meeting minutes they said the following...

In the latest modal forecast, conditioned on a market-implied path for Bank Rate that rises to around 4 1⁄2% in mid-2023 and falls back to just over 3 1⁄4% in three years’ time, an increasing degree of economic slack, alongside falling external pressures, leads CPI inflation to decline to below the 2% target in the medium term. There are considerable uncertainties around this medium-term outlook, and the Committee continues to judge that the risks to inflation are skewed significantly to the upside.​

 

[CaptainDaveUK]

And fixed rate mortgage deals continue to fall from the October peak. See if that more positive news gets reported.

My fixed rate mortgage is due to renew in June. I’ve been tracking the rates since January. If your mortgage is coming up for renewal you can fix the rate you pay now. If the rate goes up in a few months time you will renew at the rate you accept now. If the rate goes down, you can get in touch and take the new rate. Don’t just wait until there are a few weeks to go and you just get the rate at that moment in time. Since January my fixed 5 year rate has gone down £5 / month on about £70K mortgage. Not huge savings but a few hundred quid. My mortgage is going up about £80 / month so not great but it could be worse. The main thing is plan ahead and I would definitely recommend fix a price now, as you can switch to a better rate if it comes available.

 

[Bozza]

My fixed rate mortgage is due to renew in June. I’ve been tracking the rates since January. If your mortgage is coming up for renewal you can fix the rate you pay now. If the rate goes up in a few months time you will renew at the rate you accept now. If the rate goes down, you can get in touch and take the new rate. Don’t just wait until there are a few weeks to go and you just get the rate at that moment in time. Since January my fixed 5 year rate has gone down £5 / month on about £70K mortgage. Not huge savings but a few hundred quid. My mortgage is going up about £80 / month so not great but it could be worse. The main thing is plan ahead and I would definitely recommend fix a price now, as you can switch to a better rate if it comes available.

Absolutely.

@Uncle Spielberg started looking at mine way in advance - six months before my existing deal ran out, I think it was. Had we waited we'd have been paying hundreds of pounds a month more, as rates started going up over the course of those six months.

 

[Weststander]

My fixed rate mortgage is due to renew in June. I’ve been tracking the rates since January. If your mortgage is coming up for renewal you can fix the rate you pay now. If the rate goes up in a few months time you will renew at the rate you accept now. If the rate goes down, you can get in touch and take the new rate. Don’t just wait until there are a few weeks to go and you just get the rate at that moment in time. Since January my fixed 5 year rate has gone down £5 / month on about £70K mortgage. Not huge savings but a few hundred quid. My mortgage is going up about £80 / month so not great but it could be worse. The main thing is plan ahead and I would definitely recommend fix a price now, as you can switch to a better rate if it comes available.

Martin Lewis's latest advice is:

1. If you must have certainty, fix.
2. If not and you're willing to wait for lower rate deals say in 6 months time or next year, take a variable deal now or a fix with a very short duration, taking a longer term fix if and when rates fall. Most economists feel that interest rates will fall, the thinking is that there will one more increase in BoE rates this June of 0.25%, but later in the year falling steadily. Inherently, no guarantees on that path though.

@Uncle Spielberg ..... your expert thoughts please?

 

[SK1NT]

Crikey, I see many parallels in your story to my own but I'm probably 25 years further on up the road.
63 and retired. 2 girls, both married, and a long time career in IT.
At 42 I moved (work relocation) from Sussex to Shropshire. Bought a bigger 4-bed for £144k and sold my Burgess Hill 4-bed for £250k.
5 years later I gave up a reliable perm role with HMRC and went contracting. This gave me the work-life balance I sought with the income that enabled me to only work 60% over the next 15 years, pay off the mortgage and stash a descent wedge into a SIPP.
We had some struggles, family holidays were mostly UK based and 2 oldish cars.
But now we've come out the other side. We visit relatives in Sussex 2-3 times a year but Shropshire has been our "home" now for 22 years and whilst I miss Sussex, there's no doubt that I financially made the right decisions for my family.
There are other (difficult) choices ...

Fair play mate. Yes i am still very lucky to "own" an above average priced house... although with a massive mortgage and as you say i have choices. I could sell up and buy a house outright in somewhere up north or even have a smaller mortgage in some places in Sussex. Many don't have these choices. The system is f***ed.

I have set myself a similar 15 year plan to try and over pay.. although i do need to try and balance some family life and over paying the mortgage. We will need the odd holiday. My 6 year old always says daddy can we have a holiday (he's never been).

I have other many friends that have the same financial struggles from month to month.

A different story but what is adding to the financial pressures is the expansion of the ULEZ zone in London which means that both our older diesel cars are now un road worthy unless i pay £12.50 a day to leave my driveway. There isn't any government help. Don't get me started on this.

 

[SK1NT]

I know it’s a very difficult question to answer but has anyone an idea where we might be in 12-18 months time? I am very sorry for those who’s deals are ending here and now, it’s shithouse…

I am no means a expert but i do think we will see mortgage rates of about 3%-4% in about 12 months time and i think that these will be the norm again. I think the days of low mortgage rates are gone.

 

[Goldstone Guy]

I might have missed it in the thread but I don't think anyone's mentioned quantitative easing. You know - making billions of pounds, dollars and euros out of thin air. My understanding at the time this was happening was that it was likely to be hugely inflationary, and the fact that we didn't get inflation shortly afterwards didn't mean it wouldn't happen eventually. Clearly the Ukraine war has had an effect on food and energy prices, but politicians and central banks blaming inflation solely down to this are trying to make excuses for what they've caused aren't they? And then they say they can't put public sector wages up because that would cause inflation.

I've heard of inflation being compared to a sleeping tiger. You can prod and poke it a few times and nothing might happen, but eventually it will wake up and then all hell breaks loose. I'm not an economist and don't work in finance so happy to be corrected if I'm wrong.

Finally I'm very sorry for all those struggling with mortgages and the cost of living. I hope you'll all be ok.

 

[chickens]

I’m now fearing a high of 5.5% and the rises continuing slightly longer than currently expected. While I agree that rates will drop back to between 3% and 4% longer term, I see that taking between 18 and 36 months to arrive, depending on how ‘sticky’ inflation proves to be.

I base this on nothing more than all forecasts tend to have been run through a “try not to scare the horses” filter before being issued. I hope I’m wrong on this and inflation drops as quickly as expected, but I have a nagging doubt,. Inflation is a chain reaction that has to work its way through the entire system before easing. I fear we may have a way to go.

 

[WATFORD zero]

I might have missed it in the thread but I don't think anyone's mentioned quantitative easing. You know - making billions of pounds, dollars and euros out of thin air. My understanding at the time this was happening was that it was likely to be hugely inflationary, and the fact that we didn't get inflation shortly afterwards didn't mean it wouldn't happen eventually. Clearly the Ukraine war has had an effect on food and energy prices, but politicians and central banks blaming inflation solely down to this are trying to make excuses for what they've caused aren't they? And then they say they can't put public sector wages up because that would cause inflation.

I've heard of inflation being compared to a sleeping tiger. You can prod and poke it a few times and nothing might happen, but eventually it will wake up and then all hell breaks loose. I'm not an economist and don't work in finance so happy to be corrected if I'm wrong.

Finally I'm very sorry for all those struggling with mortgages and the cost of living. I hope you'll all be ok.

Quantitative easing may well have had an effect but the three main drivers behind the inflation figure are increasing energy prices, increasing food prices and increasing labour costs. Certainly the Ukraine war was unexpected and has had an impact, but the other major inflation drivers most knew were coming for quite a while. Until, or more accurately, unless the Government is prepared to take action to address these drivers, I can't see any significant change in the short term and the Government will continue to try and blame the BOE.

I remember being at a presentation many years ago by a senior economic advisor to Barclays, I think. (Was certainly one of the big 4).

"Using Interest rates alone to manage inflation is rather akin to pulling a housebrick with an elastic band. You know that if you pull hard enough it will move, it's the smashing you in the face that's harder to avoid"

Definitely echo your thoughts regarding those struggling with the cost of living and mortgages. My son is just looking to buy his first property and I have advised him to renew his rented apartment for a year and wait and see what the situation is in 18 months time.

 

[Uncle Spielberg]

3.94% fixed for 5 years, £ 999 fee added up to 60% ltv. Secure for 5 years and no potential £ 1 k fees every 2 years. 2 and 3 year fixed rates are higher. Anything uder 4% seems decent at the moment imo

 

[Machiavelli]

Quantitative easing may well have had an effect but the three main drivers behind the inflation figure are increasing energy prices, increasing food prices and increasing labour costs. Certainly the Ukraine war was unexpected and has had an impact, but the other major inflation drivers most have known were coming for quite a while. Until, or more accurately, unless the Government is prepared to take action to address these drivers, I can't see any significant change in the short term and the Government will continue to try and blame the BOE.

I remember being at a presentation many years ago by a senior economic advisor to Barclays, I think. (Was certainly one of the big 4).

"Using Interest rates alone to manage inflation is rather akin to pulling a housebrick with an elastic band. You know that if you pull hard enough it will move, it's the smashing you in the face that's harder to avoid"

Definitely echo your thoughts regarding those struggling with the cost of living and mortgages. My son is just looking to buy his first property and I have advised him to renew his rented apartment for a year and wait and see what the situation is in 18 months time.

Certain sectors have had labour cost inflation, ie real-term wage rises. Others haven't. Some have even lost c20% and above in real terms across just over a decade.

 

[Live by the sea]

Are you f***. You just post utter horseshit from your grandad’s basement to get a rise out of people who are genuinely concerned about their financial well-being.

You must feel so proud when you drift off to sleep surrounded by wankstained tissues…

I hope that wasn’t aimed at me !

 

[Live by the sea]

I’m not entirely sure he is though. I suspect he’s never been to America and has developed an odd internet persona from his grotty wankchamber.

I could be wrong though.

So I’m not allowed to tell my story in case it might upsets someone else who might be in a different financial position . How does this mean I’m winding someone up ! I’m not showing off , I’m just saying what my plan is , anyone can do it , it’s not unique to me .

In the States other people high five people that look for solutions but you just go into a hissy fit .

 

[Weststander]

Quantitative easing may well have had an effect but the three main drivers behind the inflation figure are increasing energy prices, increasing food prices and increasing labour costs. Certainly the Ukraine war was unexpected and has had an impact, but the other major inflation drivers most knew were coming for quite a while. Until, or more accurately, unless the Government is prepared to take action to address these drivers, I can't see any significant change in the short term and the Government will continue to try and blame the BOE.

I remember being at a presentation many years ago by a senior economic advisor to Barclays, I think. (Was certainly one of the big 4).

"Using Interest rates alone to manage inflation is rather akin to pulling a housebrick with an elastic band. You know that if you pull hard enough it will move, it's the smashing you in the face that's harder to avoid"

Definitely echo your thoughts regarding those struggling with the cost of living and mortgages. My son is just looking to buy his first property and I have advised him to renew his rented apartment for a year and wait and see what the situation is in 18 months time.

Not disagreeing on your thoughts, but on that one bit, next to no consumers heeded that by taking out 1% fixed rate mortgages when @US et al were offering them.

I wonder if the great British public including 99% of mortgaged home owners didn't realise that high inflation and interest rates were coming.

A mix of; we're all busy in our lives, or the Ostrich effect, or zero interest in economics/finance or taking a punt that the 15 years of rock bottom interest rates would continue.

Home owners owners would've flocked to cheap fixed deals if they'd been alert.

 

[WATFORD zero]

Not disagreeing on your thoughts, but on that one bit, next to no consumers heeded that by taking out 1% fixed rate mortgages when @US et al were offering them.

I wonder if the great British public including 99% of mortgaged home owners didn't realise that high inflation and interest rates were coming.

A mix of; we're all busy in our lives, or the Ostrich effect, or zero interest in economics/finance or taking a punt that the 15 years of rock bottom interest rates would continue.

Home owners owners would've flocked to cheap fixed deals if they'd been alert.

I'm afraid there were plenty of predictions of the oncoming financial shitstorm that this Government were creating (and not just from me, but from qualified people as well ) but I can understand that if you have a busy life with mortgage, kids, jobs, current financial concerns then they take your attention over long term planning.

And when should you have timed a fixed interest deal ? With what we were told back in 2016, I would have planned to fix for 5 years from 2018, so would have just been coming out about now

Unfortunately none of this helps the poor sods that are now caught up in it.

 

[Herr Tubthumper]

Find me one home owner that says "my house has gone up in value by xxx thousands of pounds but that makes me sad"

A home owner who wants to move to a bigger house?

 

[Herr Tubthumper]

In the States other people high five people that look for solutions but you just go into a hissy fit .

I’m glad they high five…as a hissy fit in the US usually involves getting a Walmart machine gun out.

 

[Herr Tubthumper]

So I’m not allowed to tell my story in case it might upsets someone else who might be in a different financial position . How does this mean I’m winding someone up ! I’m not showing off , I’m just saying what my plan is , anyone can do it , it’s not unique to me .

In the States other people high five people that look for solutions but you just go into a hissy fit .

Anyone can do it?

You really are out of touch.

 

[LamieRobertson]

I'm afraid there were plenty of predictions of the oncoming financial shitstorm that this Government were creating (and not just from me, but from qualified people as well ) but I can understand that if you have a busy life with mortgage, kids, jobs, current financial concerns then they take your attention over long term planning.

And when should you have timed a fixed interest deal ? With what we were told back in 2016, I would have planned to fix for 5 years from 2018, so would have just been coming out about now

Unfortunately none of this helps the poor sods that are now caught up in it.

The BofE should take no share of blame?

I’d of thought the biggest commitment would be at the front of any financial planning, so I don’t see busy lives as an excuse….it’s been said by many experts that ‘cheap’ money wasn’t going to last forever….What I do agree with you on is the people who have fixed and who have just come out of it or are close to expiry …they did what they thought was the best.

At the end of the day houses in most parts of this country are just too dam expensive and more need to be built for the private market….social housing etc this government and previous ones over the last thirty years plus have failed miserably to sort that out.