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.

Might also be people who've re-mortgaged to take equity out for home improvements that usually you should just save up but in the 'need it now' culture guess waiting a year or two isn't so palatable

@Nothappyatwork

Still convinced the economy is booming?

https://www.theguardian.com/business/2022/aug/02/rising-energy-bills-and-staff-shortages-driving-uk-companies-into-insolvency?CMP=ShareiOSAppp_Other

The trouble is , interest rates have been an all time low for a very long time but prices have gone up. So people had to borrow a lot more just to buy something.
Interest rates were high in the 80s and early 90s but houses cost much less- average say £40-60k.
Imagine telling someone in 1995 that the house they brought cost £65 k but in 2022 would be £450k.

I really sympathise with younger buyers who have essentially been forced to borrow huge quantities because of the BOE and government's policy choices. They have worked hard to increase the debt burden to keep the large Ponzi-type scheme going. The blame should be with those in charge not with younger buyers who were told by mortgage brokers and lenders that they could borrow large amounts and no doubt only wanted to have a secure home for their families.

The governor of the BOE is being extremely explicit in terms of expectations @Nothappyatwork
www.telegraph.co.uk/business/2022/08/04/longest-recession-since-2008-inflation-hit-13pc-warns-bank-england/

Agreed, the biggest share of blame must go to those who created an economy where entire generations face significantly higher housing costs than their parents and grandparents purely because of the year they happened to be born.

My economy is just fine, thank you for asking.
Positives to take from today, the government’s that cause recession get kicked out quickly. If we are to go through a recession then the party thats least self serving navigating the way is the best outcome for the poorest in society. Raising rates did nothing but short and long term harm
in 1981 and Truss and Rishi seem determine to recreate that shit storm. However,
Where theres chaos theres cash, many do very well out of these situations, i intend to be one of them.

Have you got a separate economy to everyone else? Please expand! Is everything rosy in the People’s Republic of Nothappyatwork? Have you declared a fatwa on Elon Musk yet? So many questions.

'My economy is just fine, thank you for asking'

This line is so ridiculous that you surely must be joking @Nothappyatwork

Can you genuinely not get your head around the fact that there are winners and losers in each and every scenario ? Those gleefully - and stupidly- rubbing there hands together at the prospect of a taxable, gain in interest - ridiculously- considering themselves the current winners.

There are micro economies within economies, the very bottom have their own economy within their micro economy.
Plenty of cash sloshing around at both ends of the scale

Yes, that is right. Everyone who disagrees with you is ‘stupid’. Or ‘gleefully stupid’. Whilst rubbing there (sic) hands together. Or ‘ridiculous’. Or a ‘Cnut’, as you called somebody upthread for expressing interest in the MPC’s decision on rates.

Why, oh why, won’t everyone come around to your unique point of view? It’s so well-reasoned, and expressed in such a persuasive way. You truly are a voice crying in the wilderness.

"On Monday, Hinckley and Rugby Building Society increased its standard variable rate to 6.44 per cent."

Sign of things to come.

It's worth reading the August monetary policy report.

www.bankofengland.co.uk/monetary-policy-report/2022/august-2022

Inflation is expected to remain above the 2% target for 18 months, falling to 2% in Q3 2024, then 0.8% in Q3 2025. Bank rate is forecast to hit 3% in Q3 2023, then start falling to 2.5% in Q3 2024, and 2.2% in 2025. (Table 1.A in the report).

Actually the Bank of England tefuts yhat and in an interview on radio 4 claimed things would not get close to pre 2008 levels.
H&R are used for high risk, subprime lending, of course they are more expensive.

Dont let facts get in the way of a good frothing, youll spoil the fun.

I have been on the MN property boards for the past year and in that time the advice has been to stretch and buy your dream home.

Lots of people saying they did just that 10 years ago and now their house has doubled in value.

The people doing it now will be fucked, especially along with energy rises.

We have been financially struggling (collapsing) for the last three years because I had to leave my career to care for my middle child full time. Life on one wage meant we slowly but surely slipped into debt, until we could borrow no more.

We were downsizing to a flat but it has taken so long to sell our place and buy another (10 months) that we are moving into a rental next week.

We have a huge amount of equity that we intend to supplement dh's wage with so we can live comfortably again.

I bought my first home in 2006. We have made some money but now now we need it to pay the rent, heat the house and feed our kids.

And actually, it is a huge relief.

My Mother has a house worth 1m and savings in the bank of 1m. We went NC last year, but she truly believes she is financially secure because "they worked hard" and were sensible. She never had a job or a disabled child but it doesn't fit her entitled middle class narrative to admit that.

When she dies she will loose 40% of assets she could have shared with her four adult children. But they are hers and she would rather go greedily to her grave knowing no one else benefited from that money.

It is possible we will rent for the rest of our lives but - after not knowing how I was going to buy food some weeks - it doesn't seem so bad.

@Nothappyatwork 😇

Bank rate is forecast to hit 3% in Q3 2023, then start falling to 2.5% in Q3 2024, and 2.2% in 2025.

So most people coming off a fix in the next 3 years are going to pay more interest on their mortgage.

I think it's right to say that most people with fixed rate mortgages, when they mature, will pay more interest, yes. Whether they re-fix or remain on variable for a while, but base rate at 0.5% was never going to be sustainable in the long term. Current forecasts however are that base rate will peak next year, before starting to fall again. If you look at longer term rates (swap rates) these are currently elevated in the short term, market swap rates (the basis on which mortgage fixed rates are priced) for 2y are currently 2.65%, 10y rates are 2.05% and 20y 1.99%. If you look at 40y swap rates, these are c.1.85%.

So to answer the title of the thread, your answer is "not in the next few years"?

I’m 2.5 years into a 5 year fix at 2.29%. Should I just let that run and then see what’s available? I do have penalties if I remortgage right now. House has appreciated in value considerably if the local market is anything to go by so I hoped to pull out some money when we remortgaged to get the roof done

@edwinbear

To be more precise. This thread was started in mid June, when the base rate had just gone up to 1.25%. So the question that was asked was, when will the base rate go back down to under 1.25%?

My answer to the title To ask when interest rates will likely go down? is current forecasts are the back end of next year. But emphasising these are forecasts, which constantly evolve/change. I certainly think we're in for a very difficult 12-18 months, but hopeful things will start to improve after that.

@RainCloud just noticed that thanks, personally, can't see them heading back below 1.25% anytime soon. The BoE don't opine on what they think the 'neutral' rate is, but the US Fed believe in the US, it's between 2.25% - 2.50%.

There is a calculator on money saving expert called ditch which will help you work out if its cheaper to bail now or wait. For most people having made 3 years of payments reducing their mortgage by 2024 will be able to reevaluate then and avoid any noticeable increases.
I fixed for 5 years, my mortgage advisor recommended that to everyone they spoke to.