Why are annuity rates going down again?

PaddyS

I am watching them month by month. Today they have gone back down to below the level they were at in mid-June. Is there an economist or an actuary out there who understands why?

dunstonh

Long term interest rates are looking lower. Its much the same as why mortgage interest rates are going down as well.

PaddyS

Many thanks for such a quick and succint reply. Do you think the rates have peaked, then, and that they are the best I will get ?

dunstonh

Inflation would suggest interest rates should go up but slowing economies need lower interest rates (there is also money supply that can be used by interest rates are the most used). Every indication out there now suggests that the next move, when it comes, will be down. It may not be next month but there will almost certainly be a drop this year followed by another next year.

So, yes. I think interest rates have peaked based on current data.

PaddyS

Dear Dunstonh
I really appreciate that bit of advice. Your thinking makes a great deal of sense. Thanks again.:T

PaddyS

I notice that you have thousands of thanks. I've looked everywhere to see how I add my own thanks - but am failing miserably. Advice please!

dunstonh

look in the post in question and to the right side bottom of each post you will see two buttons. One is quote and the other is thanks. Press the thanks on posts you appreciate. Quote is a quick way to respond to a post in a thread where there may be multiple questions being asked by different people and you want to reply to a post in particular.

EdInvestor

dunstonh wrote: »

Inflation would suggest interest rates should go up

It looks like the inflationary pressures have also peaked.The oil price is down quite a lot and so are commodity prices for things like wheat, which were feeding through to food prices. The markets certainly think the next interest rate move is down, that's why sterling has weakened.

Dick_here

PaddyS wrote: »

I notice that you have thousands of thanks. I've looked everywhere to see how I add my own thanks - but am failing miserably. Advice please!

Don't worry, Paddy, it isn't just you. Ed has the same problem with all of dunston's posts

wheredoesallthetimego

>> Inflation would suggest interest rates should go
For the UK that was when the government was pretending that we were in good shape to avoid a recession (best in developed world?). Now they are being a bit more realistic about it the interest rates have more downward pressure than upward.

The weakening pound would help exports but that's no longer a large part of our economy. The service industries (which was meant to be our future) are being undermined by the tax system. Add to that increasing liabilities being realised from pfi (which should have been on book but an EU agreement means they are hidden for a bit longer). All puts pressure on increasing the tax burden (but probably still not the rate.

All comes down to people having less money which should control inflation so the pressure on interest rates is downward.

My belief is that they should have been a lot higher about a year ago and then there would be a lot less difficulty about the decisions now - but that's from a financial point of view not political.

EdInvestor

!!!!!!_here wrote: »

Ed has the same problem with all of dunston's posts

Actually I'd say I probably thank him as much as he thanks me, and it's usually because he has posted some original information or a particularly clear expression of a mutually-held view. ..

A non reaction is likely to indicate either agreement on a routine judgment , or that the issue is non-controversial.

If there is disagreement you will usually see it expressed.;)