When do you think mortgage rates will go down?

[YouLittlePlonka]

?

Most likely in a couple of years, when inflation eventually drops back to around 2%.

We'll still likely be seeing low growth rates and the BoE will be back to reducing interest rates to stimulate growth (which was massively successful last time 🙄)

The banks are still pricing mortgages at a lower rate for longer term fixes which suggests they expect a drop.

I think the banks have been really wrong over the last 12 months or so, I dont believe they are correct on this.

Don't agree with that at all. People will still inherit sums of money and be able to use that as deposits to buy a home. There is no reason why plenty of people can't continue to buy houses if it stays at 5.5%.

Some time after the next general election when we get a fiscally responsible government.

Sorry, but this is the "new normal" for the foreseeable future. Everyone knows that interest rates have been artificially far too low for the past 10-15 years. I think they'll go up by another couple of percent or so and then maybe stop a couple of points and then remain relatively steady around current levels for the next decade or so.

Realistically, the UK govt of whatever colour has little control of international interest rates and the rates that the UK is charged on our huge borrowings. Different colours of Govt can tweak things a little bit, but in reality, we're just puppets under the control of the international money markets.

But if you're inheriting ftom your parents you'll likely be buying your first house in your 60s/70s. No one will be giving you a 25 year mortgage at that age.

I agree rates aren't going to go back to the lows of recent history, house prices will have to fall somewhat because people can't buy at these rates, and there will be new mortgages with longer terms or a percentage of it being interest only to be paid off with the iump sum from your pension.

I’m currently dialled into an economic update call with my professional services firm and they expect rates to drop back to 3.25% with rates beginning to drop late 2024 and getting to 3.25% quite quickly.

I think the Tories choosing Liz Truss as our Prime Minister might have had a little bit to do with it @Kazzyhoward

And governments do have some control over how much they borrow.

And

How money is spent,

(It's not obligatory for a Tory donor to make gargantuan profits off the public services we pay for, it just has been the norm for the last 13 years.)

And governments have control over servicing the country's debt properly.

(Rishi Sunak's mismanagement cost the country £11 billion.

And governments do have control over how much they allow energy companies to charge us which is a major driver of the rampant inflation that keeps heading to interest rate rises.

Yes the next government will inherit a godawful mess from the Tories, but a competent government that actually wants to govern (rather than just act as a conduit to funnel public money into private hands) can do a lot differently.

@onefinemess you need to remember that house prices aren't astronomical country wide - where I live a 3 bed semi near good schools in a decent enough area is still around £170k. Not at all unobtainable, or the cause of a terrible quality of life for a couple both working ft.

Fair enough. What do you think they've been wrong about? I suspect they are continuing to make big profits

I think their timeline is too short. I don't think rates will drop as soon as expected by the banks. So I think their long term fixed rates are too low.

Obviously im not an expert and everyone has their own opinion.

😂

Not sure if this is a serious post or not...

@verdantverdure

And governments do have some control over how much they borrow.

They have no control over the debts they inherit though, do they? They can only control FUTURE borrowing and spending. The next incoming government will have around 2 TRILLION of debt upon which interest is payable at rates decided by the people/institutions lending it to the UK!

That’s very true and with the rise of remote working, actually some of our dc have better opportunities to move about the country yet still have good, professional jobs.
which will leave the south east full of either the very wealthy, or the absolute poorest (in social housing), whilst the middle incomes move to cheaper areas.

Well it certainly doesn't chime with what Mark Carney said or what the markets are pricing.

But no one can accurately predict what interest rates will do long term.

Did they give the reasoning? I guess they must be expecting inflation to fall significantly below 2% and a sharp recession? Even in the early 2000s when inflation was between 1-2% base rate only dropped as far as 3.5%.

The Bank of England predicts that interest rates will be back to 3.5 by 2025 so not far off. Albeit their track record when it comes to these predictions is shit.

Sooner or later the inflation jump will feed through and return to a 'normal' level. When that happens we will be back to an under performing economy, stagnating due to a lack of investment/austerity/Brexit/COVID/government incompetence.

In that scenario, one of the few mechanisms that the Bank of England has to stimulate growth is to reduce interest rates.

Yeah.

Let's not vote Tory again shall we?

I would bloody LOVE 3.5% in 2025. Love it

Deadly serious… I pretty much transcribed verbatim as she said it 😂

And the the PP who asked if a rationale was given, probably but I was scrolling Mumsnet at the time so I can’t be sure.

Given real rates are still -5.5% I think rates dropping next year seems pretty ambitious!

I'd think probably about three to four years time. Inflation even with a decent government takes a while to reduce, and rates have been historically low.

bear in mind they were ~2% a year ago and base rate was lower. Things can change fast. Whether they will depends upon what happens to core inflation once the energy/war impact falls out of the figures and what happens to the wider economy. FWIW (not a lot despite an Economics degree and over a decade in the financial services industry) 3-3.5% in 2025 seems a reasonable guess.

I hope so. My fixed rate ends in 2026