Mortgage interest rate predictions

[boating32]

Anyone knowledgeable/have a crystal ball in this area? I have a tracker at 0.6% above base rate so currently I could get a much cheaper fixed rate. However I am wondering if the cheaper deals on fixed rates indicates the interest rates will come down over next few years so the tracker might end being a good deal. Does this sound sensible or am I kidding myself?

No one has a crystal ball, but for me the risks remain on the upside with rates. If the economy remains stronger than forecast and pay deals can’t be brought down to 2-3% then rates won’t fall but will rise slowly until job security is reduced to a point where workers are happy with a small rise.
So I would take a fixed rate at the moment. Probably 5yr.
Hope springs eternal but I’m not very hopeful.

Would also love to know this.

We bought our house 4 years ago and went for a 5 year fixed. How I wish we’d gone for 10 or 15 years… we were young and naive and had no idea mortgage rates were at a historic low!

Need to remortgage early next year and anxiously watching what the rates are doing. I can’t handle the jeopardy of a tracker so will go fixed, just not sure how long for.

Our mortgage broker thinks rates will rise rather than fall - although obviously no guarantee

Economist on Radio 4 this morning claimed that City analysts are expecting a 1% rise over the next year before any possible fall.

I've literally just sent documentation over to broker to secure a 5 yr fixed at 3.93%. I'm far too risk averse to play the market and the monthly repayments came within budget so that's enough for me. FWIW the broker thinks rates will fall and if I manage to get a better deal in 5 years time then great. I don't think there's a right answer - it all comes down to your own tolerance of risk and ability to cope with any increases in your repayments.

So you are paying 5.1%?
Historically, trackers were very good to us, but id be looking at what fixed rates are about right now. I cant see interests rates falling massively in the next few years - they are currently on the low side of the historical average, imo.
What fixes are you being offered?

I read this earlier

"BoE forecasts predict that interest rates will peak at 4.75% at the end of 2023 before falling to around 3.5% by 2025."

However I've also seen reports that even though the interest rates are rising, some mortgages are starting to come down.

I need to change mine at the end of this year and there's not a chance I'll be fixing in for 5 years.

I'm looking to fix again at the end of this year after our 5 year fix comes to an end. I think we'll probably do a three year fix which I'm hoping is a sort of middle ground.

I've actually stopped worrying about it now, que sera.

These are two headlines within hours of each other:

Mortgage rates ‘set to drop’ as inflation falls

Mortgages in the UK Look Set to Get a Lot More Expensive

I'm starting to feel that nobody has a sodding clue what is happening.

Only just starting? No one has had a clue for ages - it was all meant to have clamed down by now, and yet it's still getting worse!

Looks pretty out of date to me. That would imply only one 25 bps rise left this year as we are already at 4.5%

I think the market is gradually coming round to the opinion that rates are going to go higher for longer, esp. with the release of today's inflation figures.

I'll add though that nothing in life is a certainty.

Looks pretty out of date to me. That would imply only one 25 bps rise left this year as we are already at 4.5%

Like I said - there are numerous articles written today that all say different things. Nobody can predict.

Well that got exciting pretty quickly !

10 year gilt up to 4.4% +

https://www.reuters.com/world/uk/uks-nationwide-says-will-raise-mortgage-rates-markets-convulse-2023-05-25/

Yes a sharp rise in gilt yields this week. Those inflation figures have spooked the markets and the fear is that the BOE have lost control. You can’t pussy foot around with inflation.

Firstly, no-one knows for certain what will happen to interest rates, not even the Bank of England who set them know what they will do in 6 months, 1 year or let alone 5 years time.

Secondly the main benefit of a fixed rate is CERTAINTY. It's impossible to know whether the fixed rate will be better or worse than Base + 0.6% ... so do you want the comfort of knowing it won't go higher (but also the risk it might go lower and you miss out) or can you afford to ride out the ups and downs?

Thirdly, my purely personal opinion is that Base Rate will increase to at least 5.25% if not 5.5% within the next year or so. During my lifetime interest rates have varied from 0.1% to 14% so it's not really easy to say they will definitely be X or Y in 5 years time.