Active discussions

Meet the Other Phone. Flexible and made to last.

Meet the Other Phone.
Flexible and made to last.

Buy now

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

BoE announce interest rate rise

127 replies

Darkandstormynite · 11/05/2023 13:43

Just seen BoE has confirmed interest rate to rise to 4.5%

AIBU to think we haven't reached the top yet and there's more to come?

OP posts:
Original poster
Darkandstormynite · 11/05/2023 13:57

I'm in the process of buying a house so waiting to see how lenders react to latest rise. So do have skin in the game.

Someone made a comment earlier on a thread about this potentially being the new bottom rate (i.e we will look back on this level as being cheap). I can't see it going down again in the next decade or so given issues with inflation.

OP posts:
Swrigh1234 · 11/05/2023 14:03

You are not wrong.

There is a reason why the UK economy is growing more slowly than others. Why inflation here is just not budging whole Eurozone and US have much lower inflation. While energy prices have nosedived. As well as the incompetent corrupt government not being able to do anything useful, they actively damaged the economy by printing half a trillion pounds to pay healthy people to be locked down. Now everyone is paying it back. Or at least some people are. Was it worth it?

CatOnTheChair · 11/05/2023 14:09

I would think we are just getting back to having an interest rate around the average.
The low interest rates we have seen over the past 15 years are not a true reflection of long term rates.
Trouble is, there are now all sorts of people who have never experienced adult life without easy access to cheap credit, and it is going to take a lot of pain and readjustment to the higher rates, especially when combined with the crazy inflation figures.
I very much doubt I'll see the tiny mortgage rate I was paying in 2010 again!

MereDintofPandiculation · 11/05/2023 14:09

As well as the incompetent corrupt government not being able to do anything useful, they actively damaged the economy by printing half a trillion pounds to pay healthy people to be locked down. Now everyone is paying it back. Or at least some people are. Was it worth it?. We were not the only country to lock down. I’d be looking for an event unique to us

Swrigh1234 · 11/05/2023 14:22

MereDintofPandiculation · 11/05/2023 14:09

As well as the incompetent corrupt government not being able to do anything useful, they actively damaged the economy by printing half a trillion pounds to pay healthy people to be locked down. Now everyone is paying it back. Or at least some people are. Was it worth it?. We were not the only country to lock down. I’d be looking for an event unique to us

No, but we didn’t have the means to pay for this unnecessary measure. Others did. We’re all paying for it now though.

Vomdotcom · 11/05/2023 14:29

I work in a bank and we have top tier actuaries and economists working on forecasting and pricing and the general consensus is that mid point next year inflation will be almost back to normal and it was start to come down tail end of this year and then continue until summer and the 2025 to return to BoE target. The BR is set to start falling from next year. It makes no sense as to why the BR and interest would remain high when inflation gets back in line with targets.

whilst I don’t think we’ll see interest rates as low as they were in the pandemic sun 2 things will stabilise.

LakieLady · 11/05/2023 14:43

CatOnTheChair · 11/05/2023 14:09

I would think we are just getting back to having an interest rate around the average.
The low interest rates we have seen over the past 15 years are not a true reflection of long term rates.
Trouble is, there are now all sorts of people who have never experienced adult life without easy access to cheap credit, and it is going to take a lot of pain and readjustment to the higher rates, especially when combined with the crazy inflation figures.
I very much doubt I'll see the tiny mortgage rate I was paying in 2010 again!

I agree. All my instincts are that the "natural" level for interest rates is around 4%-5%, even though they've been higher than that for much of my lifetime.

We've had a very long period of low interest rates, pretty much since the mid-late '90s, this was inevitable really.

caringcarer · 11/05/2023 14:58

I just heard on TV it was not a unanimous decision to raise the rate as the previous decisions have been. 2 wanted to freeze the rate. This is the 12th rate rise in a row. I'm hoping it comes down, for all of those who have to remortgage this year.

Vomdotcom · 11/05/2023 15:03

caringcarer · 11/05/2023 14:58

I just heard on TV it was not a unanimous decision to raise the rate as the previous decisions have been. 2 wanted to freeze the rate. This is the 12th rate rise in a row. I'm hoping it comes down, for all of those who have to remortgage this year.

I’ve got mine due too and I’m thinking tracker with no erc given that br is due to come down

Dreamstate · 11/05/2023 15:13

Vomdotcom · 11/05/2023 14:29

I work in a bank and we have top tier actuaries and economists working on forecasting and pricing and the general consensus is that mid point next year inflation will be almost back to normal and it was start to come down tail end of this year and then continue until summer and the 2025 to return to BoE target. The BR is set to start falling from next year. It makes no sense as to why the BR and interest would remain high when inflation gets back in line with targets.

whilst I don’t think we’ll see interest rates as low as they were in the pandemic sun 2 things will stabilise.

What is their target? My current fixed rate ends in 2025 so interested to know

Vomdotcom · 11/05/2023 15:23

Dreamstate · 11/05/2023 15:13

What is their target? My current fixed rate ends in 2025 so interested to know

Show quote history

The boe target for inflation? It’s 2%

Sagittariusrising · 11/05/2023 15:27

@CatOnTheChair Agree. People have got used to the historically low rate, some not having experience of anything else. The only way for interest rates to go was up, sadly.

Original poster
Darkandstormynite · 11/05/2023 15:28

Vomdotcom · 11/05/2023 15:23

The boe target for inflation? It’s 2%

Show quote history

I think they mean BoE base rate, rather than inflation

OP posts:
Dreamstate · 11/05/2023 15:29

To be honest I started on 3.69% 10yrs ago so not too annoyed if I have to go back to a rate near that. Enjoy my 1.69% whilst I have it lol

Vomdotcom · 11/05/2023 15:33

Darkandstormynite · 11/05/2023 15:28

I think they mean BoE base rate, rather than inflation

Show quote history

Don’t think they have a BR target as such but it’s expected to trend at around 3.75% for 2024 and 2.75% in 2025

Sundaefraise · 11/05/2023 15:35

I think they will now hold this interest rate for a short time and wait to see what inflation does. Predictions are that interest rates will start to come down. I think if I was buying a house at the moment I would either go for a tracker in the expectation that it hopefully wouldn't get worse, or a two year fix in the expectation that somewhere down the line there will be a reduction, although not to the very low levels we have seen.

towriteyoumustlive · 11/05/2023 15:36

Historically (going back to 1975), interest rates are still low!

The graph shows changes up and down, with the average of those being around 9%!!

I remember as a child growing up in the 1980s that I always got good interest on my savings (I often asked for money for birthdays!).

My parents bought a house in 1988 when interest rates were around 9%, which then rose to 14% a year later!

I think it will creep up to 5% then start dropping back down again.

BoE announce interest rate rise
Original poster
Darkandstormynite · 11/05/2023 15:40

I'm no analyst but I can't see why inflation returning to normal levels would trigger a drop in BoE base rate.

When inflation normalises, we need measures in place to keep it low. So a prolonged period of stabilisation at a realistic interest rate would seem sensible. This would also allow savings and investments to bolster and for debt levels to decrease because of affordability. Globally, we are all hooked on cheap debt and are over leveraged, creating a systemic vulnerability.

It's only a matter of time before another financial crisis looms given our debt levels globally (looking at the US here as the canary in the mine). If we lower the rates too quickly we won't have a mechanism to weather future storms and we're back to square one.

That's why I can't see a reason to lower interest rates in the next few years. In the same way interest rates stayed so low for so long.

We can put forward personal arguments why we would like them to be lower, such as mortgage affordability but from a global perspective it doesn't feel like it would be a good move.

OP posts:
PinkCherryBlossoms · 11/05/2023 15:51

I doubt this will be the last rise, for reasons others have given. 4.5% just isn't that low really.

SunnyEgg · 11/05/2023 15:52

towriteyoumustlive · 11/05/2023 15:36

Historically (going back to 1975), interest rates are still low!

The graph shows changes up and down, with the average of those being around 9%!!

I remember as a child growing up in the 1980s that I always got good interest on my savings (I often asked for money for birthdays!).

My parents bought a house in 1988 when interest rates were around 9%, which then rose to 14% a year later!

I think it will creep up to 5% then start dropping back down again.

That chart is pretty stark

Fifi00 · 11/05/2023 15:59

The economy never properly recovered from the 2008 crash. They made borrowing cheap so assets increased in price wages have stagnated. On paper we were rich but not really. Just as things were looking up they were going to increase rates. Covid came and they pumped the economy with half a trillion of extra money. Healthy people were paid to stay at home and extra money was printing. Inflation was always going to happen, the dream of low base rate isn't going to happen. It can't because the economy is fucked.

Vomdotcom · 11/05/2023 16:00

This link is quite good.

https://capital.com/amp/projected-interest-rates-in-5-years-in-the-uk

Vomdotcom · 11/05/2023 16:00

This link is quite good.

https://capital.com/amp/projected-interest-rates-in-5-years-in-the-uk

Vomdotcom · 11/05/2023 16:01

This link is quite good.

https://capital.com/amp/projected-interest-rates-in-5-years-in-the-uk

Vomdotcom · 11/05/2023 16:01

Ffs why did that post 3 times, sorry all!