To ask when interest rates will likely go down?

[AnxietyLevelMax]

We are close to remortgaging for the first time. Long long time ago i was happy and excited thinking we will be paying less by £200 min per month. Right now our rate would change. We still have 5 more months before we can remortgage so we can end up paying even more than now.

how long do u think it will all last?

i dont know how we are going to do that, we cant save anything now because we are paying debts, childcare is expensive as hell, everything is expensive, we barely make it month to month paying debts off but it will still take us 1.5-2 yrs min. We have no financial cushion. I am worried as hell, cant sleep worrying if something happens we dont have any extra money.

The employment market is tight because half a million workers left the labour market between March 20 and March 2022. Could be EUs going home, could be people retiring early. So I wonder if we aren't seeing the impact of companies not doing so well due to this.

yes partly due to Brexit but also a large exodus from the labour market mainly in the over 50s.

We need more immigration but...

Yes, absolutely. More businesses are failing already and business owners are often relatively well off, certainly compared to young people/ low paid retail workers.

The travel industry is likely to be hit hard, some well paid people there.

The financial sector is potentially very precarious; lots of extremely well paid people there in investment/ banking.

I read something earlier this weeks about construction firms failing. Musk has been very focal and has already made some of his employees redundant.

I agree with what you said in another post about the jobs market being tight partly because a lot of workers left the jobs market.
it seems that a lot of EU workers left permanently and a lot of people in their 50s chose early retirement/ occasional self employed work. These people, who have much less favourable pensions than the current pensioners, may well be looking for work again as the cost of living continues to rise compared to their incomes. In addition, people supporting families could increasingly be taking on extra hours.

So, a recession could well impact relatively well paid workers, not just young people working in bars/ retail, etc

So, a recession could well impact relatively well paid workers, not just young people working in bars/ retail, etc

I do think well paid workers will be hit, I just don't think the hit will translate to a housing price crash.

Why do you think prices will crash?

@hatchyu

I said I'm on the fence in my comment earlier. On the fence means undecided.

I'm undecided because of the strong employment market. If that changes then I think higher unemployment plus cost of living and interest rate rises will probably lead to a crash. The strong employment market could change, for the reasons mentioned below. It changed almost overnight in 2008.

@FortonServices sorry that was for @rainingsnoring. Ive explained my reasons why I don't think they will but I could be wrong of course.

It was @rainingsnoring post I highlighted & replied too....

I think it's too early to call it. There are a lot of alarm bells going off but things could still go either way. A big rise in unemployment would be the final domino IMO.

I read something earlier this weeks about construction firms failing.

There was an article in the Guardian about share prices dropping, construction firms are one of the worst hit. I wondered if this was due to the increased cost of building materials, it must be making their margins low.

Also, new house builders may be being hit by the impending end of help to buy.

I said that I think houses will likely fall rather than stagnate although obviously some areas will hold far better than others. I said there could be a significant fall or 'crash'.

I think it's likely because of the combination of factors:
Households have record levels of debt (so do governments but that's a separate problem).
Interest rates are rising which has a direct effect on the debt, ability to take on more debt and lenders willingness to lend.
The cost of essentials has risen hugely and this is expected to continue. Not sure what the percentage is exactly but household energy is up something like 40%, petrol maybe 30%. That will impact on household budgets and again on lending.
We are likely to be in recession now/ very soon.
That will likely lead to more job losses. Just seen this comment by Mark Zuckerberg: www.telegraph.co.uk/technology/2022/07/01/mark-zuckerberg-tells-meta-execs-find-staff-who-shouldnt/?li_source=LI&li_medium=liftigniter-rhr
The financial sector is precarious and that could lead to wealthy people (and others) losing lots of money.
Multiple other economies worldwide look to be in trouble at the same time.
The whole combination would add up to a significant reduction in what people can afford and a huge change in sentiment.

This is only my opinion and others will disagree!

Tbf Facebook need to be doing that regardless, tik tok is where it's at plus the ad revenue changes are hitting profit. There has been some culls in tech but still lots of jobs out there. That article talks about hiring 6000-7000 engineers.

I think we are in for some tough economic times.

"If I had to bet, I'd say that this might be one of the worst downturns that we've seen in recent history,” he told employees, according to a recording of the event leaked to Reuters."

And

"Mr Zuckerberg’s comments echo those of fellow tech entrepreneur Elon Musk, who is in the process of cutting 3,500 salaried jobs because of a “super bad feeling” about the economy."

I think these two sections need highlighting.

We have had 2 months of GDP contraction in April and May. If this continues for another 4 months then as @rainingsnoring says we will be officially in recession. It's looking likely as another article below states that consumer sentiment has dropped 40% since the start of the year.

www.macrobusiness.com.au/2022/06/collapsing-mortgage-demand-hammers-new-zealand-house-prices/

Average mortgage rates in NZ are now 5-6.5%. They started raising rates in November 2021. House prices in NZ have dropped by 9% since November 2021. If the base rate in the U.K. continues to rise then we could see similar here.

Just been researching. Average U.K. mortgage rate is now 4% However, analysts are predicting a 0.5% base rate rise on 1 Aug. This would push average mortgage rates up to plus 4.5% enough for a house price reduction? Possibly IMO but not a big one, I'd guess 5% drops.

https://www.theguardian.com/australia-news/2022/jul/01/australian-house-prices-fall-for-second-month-as-interest-rates-rise?CMP=ShareiOSAppp_Other

House prices have started to drop in Australia too. Not by as much as in NZ but Aus started raising interest rates later, and not by as much yet. Aus interest rate rises are similar to the U.K.

Right, I've had enough of interest rates, recessions and house prices for today. I'm going to drink wine 😄.

Happy Friday @rainingsnoring and @hatchyu

This

Happy Friday evening @FortonServices!

I think 5 years is fine. Interest rates have been so low, for so long, I wouldn't be at all surprised if they were never this low again, tbh.

You do realise that interest rates were at something like a 400 year low.

They may never reach the lows that they were at during Covid again.

ivykaty44
I’d love to see some evidence as to when interest rates hit 15% for a couple of years please …. my understanding is it was a matter of days before everything was brought back under control again

I must have lived in a dream then. I wonder why I rented out my only bedroom and lived in my living room whilst doing my day job, working in a pub in the evenings and having an antique stall on weekends because my mortgage rocketed to 15% if it only lasted a couple of days?

I’d love to see some evidence as to when interest rates hit 15% for a couple of years please

Here you go, ivykaty - the 15% wouldn't be strictly accurate because it varied between 12 and 17%, but as an average it's not far off:

www.propertyinvestmentproject.co.uk/property-statistics/uk-interest-rate-history-graph/

Sterling was below $1.20 for a while today, which is the lowest it's been for quite a time. (I can't actually remember it being lower, but my memory's a bit shit.)

If it continues to bump along close to the $1.20 mark, that will make the BOE more inclined to increase interest rates to stop a sterling slide. It's especially critical just now while oil prices are high, because oil is traded in dollars, so a fall in the £:$ rate makes our oil even more expensive.

And that affects the price of an awful lot of other stuff.

Partly Due to brexit is squinting the eyes and looking for confirmation rather than looking at the intertwined global situation and the fact the whole world locked down for near enough 2 years.

America has officially hit recession
www.fxstreet.com/news/us-atlanta-fed-gdpnow-for-q2-drops-to-1-from-03-202206301607
(not brexit related), inflation in the EU is at historic levels (also not Brexit related)

The current low interest rates are because of the global financial crash in 2008 and governments propping up the housing and zombie business market, add on top of that the debt crisis and everyone and their dog believing the neolib mindset of things only increase in value, it's the black swan. Interest rates will slowly increase, 0.5 is an anomaly that was only supposed to be temporary.