Interested in Interest Rate Predictions

[HopelesslyOptimistic]

Due to re-morgage in December. Best deal at the moment is 5.3% 2 year deal. Lots of equity. Should I hold off until early next year or go fixed for the short term. CPI just over 6% and inflation slowly coming down. Inflation figures due to be published on 18th October so I'm holding out to see what the Bank of Theft (sorry England) does.

Any movement in the BOE rate up or down isn't guaranteed to be reflected in any mortgage products automatically. Whether it goes up or down it will likely only do so by 0.25 so not going to make a material difference to you.

I personally secured a 2 year fix back in June that kicks in next month at 5.04% - on the expectation or hope that in 2 years time the rates are marginally lower than they are today.

Thanks Hitchens, my heads saying I'll fix but just wanted to see if I was missing anything obvious,

I absolutely do not think we will see any lowering of the Bank of England base rate whatsoever within the next nine months at the very least. The economy and outlook are just too grim to allow it to happen. Inflation might have shrunk a teeny bit but there are two really massive things that haven't hit it much yet: the cost of people's extortionate mortgage rises isn't fully fed through to the numbers and fuel will increase over winter and that will cause an inflation spike. 600,000 will have to remortgage between now and the end of the year. Most of whom will be on extremely low rates.

Mortgage rates are a different matter. I went back through historic bases rates versus the average mortgage rates a while ago and I discovered a time when the average mortgage rate was about 0.5 lower than the BoE base rate. I can only assume banks were fighting with each other to get customers and had to take the financial, short term hit. I have no idea if this is likely to happen again. They seem to prefer getting people to extend their mortgages by ten years these days - because it makes them a ton more money.

You should be able to arrange a remortgage through a broker now and if that lender lowers their mortgage rate on the same deal you have agreed before the switch in product takes place at the end of the year, the broker should be able to get the lower rate with the same lender for you. A lot of lenders do this automatically. But make it clear to any broker you speak to that if your future lender lowers the rate on the deal you agree to, you want your new deal lowered too.

It's pretty standard practice so shouldn't be hard to achieve.

Thanks Kievlovertwo, appreciate you sharing your knowledge & makes perfect sense to me. Will definitely take onboard about the broker and rate change. Cheers

I would suggest giving this article a read: https://www.theguardian.com/business/2023/oct/10/global-economy-proving-remarkably-resilient-to-recent-shocks-says-imf

Also worth remembering that mortgage rates are based on swap rates and not the BoE base rate, and these do look to be coming down slightly.
https://www.ftadviser.com/mortgages/2023/09/25/two-year-swap-rates-falling-below-5-best-news-in-months/