Uk interest rates expected to double by feb

[gracedentssketty]

Read in telegraph and Bloomberg this morning that the markets are betting on this with one analyst saying they are likely to hit 4%

are we all screwed?

There are 3 more MPC meetings between now and Feb. The base rate is currently 1.75%. I really cannot see three consecutive rises of 0.75bps happening. Three rises of 0.5 is more plausible but I still wouldn’t say it was certain. The FT today quoted Andrew Bailey complaining that inflation is being driven by things outside the Bank’s control so I don’t think he wants to be too aggressive. I do think we will see another 0.5 increase in September at least though.

The rates are too low as it stands. They need to get back to 3 or 4% and people need to plan with this in mind.

I would agree that the rates have been too low for too long.

I agree rates have been too low for too long and that they will eventually revert to the mean. But I don’t think that will happen by February.

I just hope it gets passed on to savings accounts if it does.
Some accounts are still barely paying 0.5% - much lower than they should be.

My thoughts exactly. It’s about time we started seeing a return on our savings.

I'm all for further interest rate rises to boost savings. Can't happen quickly enough.

Absolutely this. There’s a good discussion of the knock on effects of interest rates being too low on a recent Moneyweek podcast.

My first mortgage was around 4% and I thought it was a pretty good deal. I wouldn’t count count on rates going very low again in our lifetimes.

Interest rates have been artificially low for too long which has lulled people into a false understanding of what is usual. At the same time savers have been screwed for the last 14 years.

4% would still be slightly below historical averages

agree with all PPs! they need to rise but I don't understand why savings rates are still so low, it's very annoying.

Agree that interest rates have been very low for a long time and lulled people into a false sense of security. However some people are going to be really screwed by this, for example a 2% rise on a 200k mortgage equates to about £330 a month, that’s in addition to the massive rise in energy and food prices. Unfortunately quite a lot of people thought interest rates would never go up and are going to struggle.

@ChickPeaChic I think for a lot of peopel it isn’t that they didn’t think interest rates would go up, rather than young people had no choice but to borrow more to buy a house

I think the BoE has been too spineless over the years- it would have been better to bring interest rates up gradually over a longer period before it was absolutely necessary. Now they’re forced to do it by spiralling inflation, meaning borrowers have the double whammy of higher prices and higher rates.

it will really impact us, took out a mortgage at the start of this year when rates were low. If rates rise to 4% we might struggle to afford our mortgage when the deal is up. Luckily we have 5yrs and so can see how things are then. We will have also stopped paying gigantic nursery fees by then too.

I know that sounds dramatic but 4% really isn’t very high

Well, it's about time as they have been ridiculously low for far too long. Advice used to be that anyone taking out a mortgage should expect to pay about 7% on average, so surely people will have been budgeting for that and saving the surplus in the last few years? Some of us remember paying 15% or 16% for our mortgage, so it's all relative.

4% is historically low. Even regarded as standard. This is why people get cross being told they had it easy buying a house in the 70s. If the rate multiplies by a factor of 7, that's why it was tough.

And no we aren't all screwed. It means for a year or two there may be no holidays, no second car, no new clothes, I might have to take a lodger, it's not fun but most will manage somehow.

At least the mortgage industry don't foreclose as easily as they used to. They don't want to end up with huge numbers of empty properties on their hands, so a temporary arrangement will be found.

Poor people are screwed

So thankfully not all of us

I’m fed up of people quoting 15% rates, that’s when houses were affordable on one salary. Now they aren’t.

It’s not fair that everywhere is so keen to cash in with things such as increased loan APR/fuel prices (you name it). Yet when there’s even one tiny thing that people could benefit from they’re bloody slow off the mark AKA don’t do anything 🙄

I don't get it - all it will do is take more money out of people's pockets and in turn knock on to less spending with small businesses etc...recession...

I know its vital to control inflation but if its outside forces causing it raising rates won't do anything.

Good. They need to go up. They have been kept artificially low for far too long and this has completely distorted the economy, making housing far too expensive, getting people into massive debt. We need a return to "normal" interest rates.

@MyNameIsAngelicaSchuyler exactly. I am sick of the older generation going on about how they paid 15%. It was for a short time and in very small amounts. It’s comparable to paying 7% now.
Most people haven’t chosen to overstretch. They’ve had no choice. Previous period of high interest rates have had wage growth too.

@Hbh17 so surely people will have been budgeting for that

nope, because, buying our first house at 24 we had 0 experience of this - and for the last 10 years, nothing changed so why would we have thought they'd suddenly jump and that this wasn't a 'people talking about the past' thing?

What has changed for us in that 10 years, is 2 sets of £1100 a month nursery fees (still another year to go with that) moved house to another which was more suitable for our growing family and so now, with all of the increases - we are in a tighter, more precarious position, than we were when we bought our first house.

nope, because, buying our first house at 24 we had 0 experience of this - and for the last 10 years, nothing changed so why would we have thought they'd suddenly jump and that this wasn't a 'people talking about the past' thing

That is an astonishing position to take. There was a reason for the artificially low interest rates, and they were always going to rise at some point.

I do agree with a PP the BoE should have started raising rated sooner so it was a more gradual increase