Are banks taking advantage of panic

[MsGus]

The BoE is chastising banks for increasing mortgage rates higher than they should have.

They have panicked people into locking themselves into 5yr and 10yr deals knowing that the rate might peak at a lower level. From a peak, the only way is down.

It is scandalous especially as they are not increasing interest rates on savings in the same way.

www.telegraph.co.uk/business/2022/11/03/mortgage-costs-have-risen-high-says-bailey-rebuke-markets/

I think it’s a bit naive to the think the Fed won’t act in US’ best interest. It’s their raison d’etre.

Exactly this.

They’ll do whatever is necessary for the US first and foremost.

markets.businessinsider.com/news/stocks/jerome-powell-fed-inflation-recession-interest-rates-hikes-housing-labor-2022-11?amp

All the central banks should have been more proactive rather than reactive. Totally agree with the danger of entrenched inflation. Even Lagarde has finally woken up in this regard.
However, the US cannot indirectly bankrupt Japan, the big economies in Europe etc without serious geopolitical and worldwide macroeconomic consequences. So let’s hope they are indeed all talking to each other somewhat. So all I am saying is I don’t think the US Fed can just act in terms of US only given how the US dollar operates. So acting in the US best interest takes on a different meaning.

Do you mind sharing your LTV ?

At some stage interest rates will come down. Have to come down to kick start the economy again. Right now demand must be brought down to address inflation. However after a while, to boost the economy, consumer spending must be encouraged. Repressing demand for too long can lead to devastating recession.

The government says it expects to start turning this corner around the latter part of 2024 but everyone will have to share the pain to get us out of this mess.

Banks' mortgage rate is based on the market's prediction of the interest path during the duration of the mortgage, not on what the Mr. Bailey says. If you want to know whether the rise in bank's mortgage rate is fair, you should check if it corresponds the movement of the current swap rates.

When the BoE says bank rates are too high, they are trying to "give signal" to the market with their statement so they can steer inflation and rates. If the market believes the rate will go down like Mr Bailey says then rates will go down, it's a self fulfilling prophercy. But he lost a lot of creditability last year insisting on inflation being "transitory" and other missteps.

The banks are acting in the commercial interests as always.

I don't think there is any suggestion that interest rates will come down in the short term. The Fed continues to send out hawkish signals and, as others have said, the BOE will need to follow to some degree (clearly they are not keen to do this and induce mass defaults). If the BOE don't follow the Fed, the £ continues to fall as I have said elsewhere.
The central banks have helped to create a total debt based Ponzi system caused by the many years of trillions of QE and ZIRP and now the turkeys have come home to roots. They are attempting to walk a dangerous tightrope. I don't see how they can be successful.

I can’t see interest rates going down any time soon. The last decade or so has been an aberration. I think they’ll settle at 6/7% for a very long time.

www.telegraph.co.uk/personal-banking/mortgages/hope-buyers-mortgage-rates-fall-back-5pc/