Interest Rates Watch

[Freetodowhatiwant]

Just posting to see if anyone else is keenly watching out for the interest rate announcement. My mortgage is fixed for almost another two years anyway so I don’t have any personal skin in the game in that sense, but I have work involvement in the property market so I have a keen interest.

What I don’t understand is if the government are using interest rates as a tool to bring down inflation but are also encouraging the banks to be lenient and do things like extend mortgage terms surely the latter counteracts the desired effect on spending? Not that anyone is out spending on luxuries but instead the rising cost of living is having this effect on inflation. Although I guess it is the only real tool they have and it has in the past been proven to work.

Apologies for any sloppy wording with this, I am on my phone on the bus. Anyway, just thought I would start an interest rate watch thread. What with that and the rain.

I’m hoping for 0.5% increase, most likely it will be 0.25% this time.

The BOE are supposed to be independent from the gov x

BoE is currently independent, and yes govt is doing & long has done many things that have inflationary effects.

Why are you hoping for that increase, due to savings?

"What I don’t understand is if the government are using interest rates as a tool to bring down inflation but are also encouraging the banks to be lenient and do things like extend mortgage terms surely the latter counteracts the desired effect on spending? Not that anyone is out spending on luxuries but instead the rising cost of living is having this effect on inflation."

Because the number of people that will need to be helped out is far less than the number of people that will reduce spending. Tens of thousands may need mortgage assistance, but millions will lower spending on holidays, extensions, cars, basically any discretionary spending because their rates have gone up.

Anyone on their uppers just trying to pay their mortgage is unlikely to be contributing to inflation beyond non discretionary spend.

That makes sense @GasPanic thanks.

Yes sorry I realise that about the BoE, not government regards setting the rate and in terms of property I know about swap rates and their influence on lenders’ rates.

I know a few people in retail who are really struggling, anecdotally it appears that people really are cutting back whether that’s because they’re shorter on cash or they’re worried about the cost of living or probably both.

Did you see this yesterday?

BBC News - Missed bill payments back to winter levels, says Which?
https://www.bbc.co.uk/news/business-66375777

Also, this:

https://www.property118.com/average-uk-rent-shatters-the-previous-record/

I saw the one about the missed bill payments, so worrying especially considering it’s summer. Supposedly summer anyway. I hadn’t seen that about rents but it’s not a surprise given the way mortgages have been going. One can only hope this doesn’t go on too long. Income is nowhere near keeping up. Rishi Sunak said the other day that small businesses are thriving. He really doesn’t have a clue.

Yes. Also I need to buy a house in a year or so, so the more downward pressure on prices, the better for me.

A correction in the housing market is not a bad thing, and I say that as someone who bought earlier this year. Things shot you so much since 2020 it probably needs to come down. But if the interest rates continue to be high of course night counteract any easing off in the difficulty of buying a property.

Ah, only 0.25%

Thank goodness. I hope that the housing market might start to thaw. It's been really slow with all the uncertainty about mortgage rates. Hopefully lenders will co tiniest to cut rates on fixes...

It could have been worse I guess.

A few mortgage lenders have already cut fixed rates in the past week or so. Of course they are still painfully high compared to recent years and for anyone coming off a low fix it’s going to be hard. I bought a new house a few months ago and had to swallow a rare or 4.69. Of course now that seems relatively good. Had it been just a month or so later I probably could not have bought the house. Other people will be in that position.

We were offered 4.99% in April.

Now I think it's likely to be over 7.

Still looking, but thinking of getting a tracker instead of a fixed rate. Fixed, even for 2 years, doesn't seem to make sense.

In your position I would be tempted to go for a tracker too. Of course no one really knows but expert speculation is that there might be one or two more rises but then if will gradually come down at least a notch or two.

If the base rate gets above about 6.5% the Government won't be able to service their debt and we'll end up like Greece.

There's really only so high it can go. I think.

You never know when it comes to politicians.

But, the BoE are meant to be independent.

Lol.

My mortgage has increased by 48% since December now.

@RoseBucket that is really painful. Is it on a tracker or did you have to fix at a relatively high rate? Mine is very painful too.

That’s what I am on BOE rate plus 0.38% but it has no early redemption penalty. I didn’t want to be tied to a high rate for 5 years but I do plan to move within a year depending on house price stability.

If it drops beyond the pre Covid over inflation, I’ll hang on to it which I suspect many will do which will reduce available of homes which then offers some stability to prices, lots of landlords though are looking to sell which will potentially create a housing crisis and continued rent rises.

Many will come with tenants in situ which will reduce the availability of those hoping for a bargain on the back of others misery.

Tracker it withdrawn the evening I signed it.

The fixes then shot up, I don’t think we will ever see 2% (and under) again but hopefully 4% will be more realistic in the future.

I was reading about the reach out campaign yesterday, nearly 90% of mortgage suppliers have signed to it so hopefully that’ll help, it seems like 2007/8 all over again but with higher everyday costs chucked in!

Is the reach out campaign that they will be lenient and consider extending terms/temp interest only? I guess I could Google

The announcement appears to have broken Rightmove. Not working on Chrome or Safari.

Huh, that's weird. My app is still working?

Working again now. I guess they have pretty hefty servers.