Interest Rate

inspector_monkfish

mitchaa wrote: »

You really think they'll go to 0 or 0.25% before they go to 0.75%?

1.5% by the end of this year and 4.5% by the end of next. There's no reason to keep them down this low apart from satisfying a minority of tracker mortgage holders. If they do not start rising soon and then start rising dramatically after election then that will cause a 2nd wave of crash. Do it gradually now and it wont.

We will see;)

the base rate is note solely there to satisfy the mortgage and housing markets !!
There a whole load of other factors the BOE has to take into account when fixing the rate.

lethal0r

im interested as to why some people think they might go lower.

the worst of the recession is well gone, and its possible (if unlikely) that at the end of this 3rd quarter the economy might even be growing.

why another drop?

inspector_monkfish

lethal0r wrote: »

im interested as to why some people think they might go lower.

the worst of the recession is well gone, and its possible (if unlikely) that at the end of this 3rd quarter the economy might even be growing.

why another drop?

they prob won't go lower, but they def won't go higher.....;)

mbga9pgf

Because despite what other people say, all the BOE are doing is targetting money supply. (Velocity of money * M4)

Velocity is currently negative despite QE, which is also relatively untested. If QE is found not to be working and Money supply is continuing to fall, a cut in Rates is the only other thing they can do, apart from posting everyone and his dog 500 quid through the post.

As to whether the worst is ovcer is yet to be seen. The way in which the banks are hoarding capital tends to suggest it may well not be over just yet.

mitchaa

Really2 wrote: »

Base rate is nothing to do with mortgages.

Nothing at all? The 2 are not linked in any way shape or form?

Come on really you know better than that

inspector_monkfish

mitchaa wrote: »

Nothing at all? The 2 are not linked in any way shape or form?

Come on really you know better than that

well not in the way you are hoping

mitchaa

inspector_monkfish wrote: »

they prob won't go lower, but they def won't go higher.....;)

In what time period my friend? Perhaps a month, but indefinitely forever is a bit wishful?

1.5% by the end of the year and 4.5% by the end of next. That's what my crystal ball is saying anyway;)

Really2

mitchaa wrote: »

Nothing at all? The 2 are not linked in any way shape or form?

Come on really you know better than that

100% the setting of base rate as nothing to do with mortgages.

BOE Website

One of the Bank of England's two core purposes is monetary stability. Monetary stability means stable prices - low inflation - and confidence in the currency. Stable prices are defined by the Government's inflation target, which the Bank seeks to meet through the decisions taken by the Monetary Policy Committee.

A principal objective of any central bank is to safeguard the value of the currency in terms of what it will purchase. Rising prices – inflation – reduces the value of money. Monetary policy is directed to achieving this objective and providing a framework for non-inflationary economic growth. As in most other developed countries, monetary policy usually operates in the UK through influencing the price of money – the interest rate. However, in March 2009 the Bank's Monetary Policy Committee announced that in addition to setting Bank Rate, it would start to inject money directly into the economy. This means that the instrument of monetary policy shifts towards the quantity of money provided rather than its price.

Low inflation is not an end in itself. It is however an important factor in helping to encourage long-term stability in the economy. Price stability is a precondition for achieving a wider economic goal of sustainable growth and employment. High inflation can be damaging to the functioning of the economy. Low inflation can help to foster sustainable long-term economic growth.

As I said, it is a reflection of inflation and the state of the economy.

mitchaa

inspector_monkfish wrote: »

well not in the way you are hoping

Ive already proven that the BOE BR and mortgage rates have no correlation with the 90% and 100% LTV examples i posted earlier, hence why i believe that if the BOE BR rise, the housing market will not suffer like many believe it will.

inspector_monkfish

mitchaa wrote: »

In what time period my friend? Perhaps a month, but indefinitely forever is a bit wishful?

1.5% by the end of the year and 4.5% by the end of next. That's what my crystal ball is saying anyway;)

12mths is what my crystal ball is showing...