BoE announce interest rate rise

[Darkandstormynite]

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?

Ah Brexit you mean. Without a doubt that has been the main issue, camouflaged by covid.

That's a lie , brexit while shit didn't cause the government to print an extra half trillion pounds to allow people to sit at home and bake banana bread.

Anyone can assert things but FWIW, what @vomdotcom states also matches my understanding.

In terms of 'I'm no analyst but I can't see why inflation returning to normal levels would trigger a drop in BoE base rate' - perhaps if/when the current BR you think will be a floor remains unchanged when inflation drops and then would cause a contraction in the economy because the BR is too high to sustain inflation (and economic activity within the targets to the extent they are coupled) then the BR will drop.

Historically, going back to 1975, average house prices didn't cost 10 times the average wage.

There've been multiple factors. Brexit is undoubtedly one. The artificially low interest rates of the past decade plus QE is another. The policy response to covid is a third.

That's interesting. So you think the drop in inflation and the interest rates sustained at current rates may result in a contraction in the economy,. which could trigger a lowering of BR to adjust.

How long does it usually take to shift into contraction?

The damage Truss & co. did last year will take years to be ironed out of the economy.

That's the bottom line. And because our economy isn't really going to go anywhere - much like paying off a credit card by paying the minimum each month - it will take that much longer.

Meanwhile I see that Ireland appears to have so much money they are creating a sovereign wealth fund that will pay off their future debts.

Inflation is running pretty hot at the moment. 2x the rate in the US. Yet our BR is lower.

The BOE is effectively letting cash holders burn while trying to prop up the economy.

My guess is that they are on the wrong side (too little stick) and rates are going to have to rise higher for longer than currently predicted in order to bring inflation under control. No one can be certain of what is going to happen though.

I am making sure any borrowing I take on is well within the limits of affordability.

That’s what the government wants you to think. So they can blame this disaster on a moment of madness rather than 13 years of mismanagement and the Covid corruption, sorry money printing. Keep falling for it.

Well if you locked in for 5 years at the rate spike due to Truss it is five years.

But ...

Mortgage rates were on the up well before Truss if you look at the average plots. We're well past the spike now and rates have been falling for some time. Probably well below the upward trajectory that was set before Truss was in office.

My guess is that it is a relatively small amount of people locked in at punitive rates, so very harsh for them, but for the economy as a whole the effect will be pretty negligible compared with other things like covid.

People like to blame everything on Truss because it is an easy correlation between "the Tories and bad management", and her actions did cause a spike at the time. But if you look at most plots on various indices you can see there was an upward trend long before Truss appeared.

A lot of smoke and mirrors from both sides if you ask me.

I’m on a tracker after the end of my last fixed rate in January and my mortgage has increased by £200, because of last two rises.

im wondering what to do now. My mortgage broker has said I could fix for 2 yrs and save £60 a month compared to now or fix for 5 years and save £140 a month. Things are already a hit tight so I’m tempted to go for 5 year (4.44%).

Im not massively financially savvy so I’d love some links or advice on what others might do

Oh don't worry. Truss could never have happened if it wasn't for the preceding 12 years that pissed away untold trillions. I'm not that shortsighted.

We'd still be fucked if Truss had never happened. Only much less so.

The UK economy is going to shrink. That means that the money printed/backing economy ratio will rise (I did maths at primary school). Which is pretty much a dictionary definition of what inflation is. That shrinkage will keep inflation - and therefore interest rates high for quite a while.

This isn't quite how the 70s were, but it's close enough. Only with far fewer people being paid by the government (thanks to all those privatisations) it will be much harder - dare I say impossible - for the treasury to impose any meaningful pay restraint.

If there were signs of growth - as opposed to merely getting back to a shit position - then there would be some leeway.

And now the Tories know what the markets will do to them again if they step out of line, we are into a weird land of little choice but big talk.

The fact that Lizzie Dripping is still a member of any political party, let alone an MP at large to royally fuck up the UKs delicate Chinese relationship tells me all I need to know about Tories and the people that pay them.

I said a hike back that they will go to least 6%

Thing is, no one has a crystal ball… I bet this time last year we didn’t really think we’d see interest rates this high or then shoot up to 7% thanks to Trussgate. But from what I understand this is set to be the highest the br will go (from the chatter in the canteen) read the link I’ve posted above. Are you on a tracker or svr? If you’re on a tracker deal Do you have erc on your current deal? Because that’s something to factor in too x

Which is what they were when I brought my house in 1999 so 24yrs ago

actuaries at work think 4.5% tops

For balance, just remember before the 12 years of the Tories Labour blew the biggest credit bubble in history and then got dumped out of power leaving it up to the Tories to fix.

They haven't done a great job IMO of fixing it to be honest. But it was Labour that created the mess in the first place.

Fairly certain it’s a tracker. At 1.21% above base rate. No early repayment charge in the tracker, I’m assuming their would be on both fixed rates, I’ve asked broker to let me know on that.

God I hate adult decisions like this 🤣

Err they actually raised to 4.5% today.

Exactly and the sentiment has been they knew this was coming and are thinking it will be the last hike

We fixed for ten years at 5% in 2007. In hindsight, a terrible decision financially, 18momths or 2 years later we could have shaved at least 3% off that.
But, it was the right decision at the time and thats all you can go on really. I'm still glad we did what we did and we still choose longer term fixes as are risk averse. I would go 5 years in your position, but only you can truly make the right decision for you.

So who else should be paying for it? All those people who were given free money during covid should pay it back imo. And keep giving people on benefits a sub when normal working people don’t get eff all isn’t helping, we are all paying for that too!

Yes sick of this lazy trope that it was lock down.

It sucks doesn’t it, in 2019 I fixed for 5 years thinking brexit would f up everything and ‘give some time for it to level out again’ wrong decision, should’ve done 3 which would’ve taken me to prime lows of pandemic and then done 5 there and then which would’ve taken us out the other side of this current disaster.

you just never know.

nationwide have a tracker at .24% above br. See the link I posted upthread that might help.. I think i might do 2 years maybe? Or move to a better tracker. It’s bloody hard

It's the cumulative effect of Tory mismanagement of the economy. Austerity + Brexit + Trussterfuck economics + (Covid + War) = Fucked Britain.