Interest rate increases post election

livsterlovster

Someone suggested to me that it was inevitable that interest rates would increase post-election in May and so now would be a good time to consider getting a new mortgage deal. My fixed term contract ended last year and so I am on the variable rate currently.
Any thoughts on this prediction?

opinions4u

I saw a report from a range of so called experts last week that suggested BofE base rates will be somewhere between 1.5% and 4% by the end of 2011.

What has been obvious during the Credit Crunch is that the cost of fixed rate funds has remained fairly stable, despite the massive reduction in BofE rate.

So it isn't at all clear what will happen to the cost of fixed rate funds over the next 18 months.

By the way, many of the so called experts failed to predict the recession, so they could all be totally wrong - again!

If I was currently on a low tracking base rate (e.g. Nationwide or C&G at 2.5%) I'd be less willing to fix than if I was on an A&L 4.99% SVR. I'd also make sure that I was saving or overpaying an amount equal to around 2%-3% additional interest to allow my budgets to adjust to any rate rises in the coming months.

Good luck .

benjo

Im not an expert in anything much, but I can confidently predict rates will rise after the general election, what I have no idea about is how soon after the election or by how much.

Opinions4u has nailed it, your decision would depend very much on your current deal, but perhaps also you should base your decision on how close to the wind you are sailing in terms of affordability when rates hit +6% +7% +8% upwards.

HarrowArrow

Why is the Election a factor, I thought BOE handled these decisions now, not the government?

opinions4u

HarrowArrow wrote: »

Why is the Election a factor, I thought BOE handled these decisions now, not the government?

I believe the Chancellor of the Exchequer has a veto over 5 of the 9 appointments to the MPC.

Although I'm sure they are all independent thinkers .

Gorgeous_George

Indeed they do but Government policy drives the decision. The Tories may well wish to follow their normal policy of higher rates to satisfy the rich regardless of the impact on the economy.

One thing is for sure, had they been in power, they would have faced the same economic disaster as the rest of the world did over the last year or two. I'm confident that the impact on the average person would have been far greater without Gordon Brown's vision and leadership.

I agree with o4u that fixed rates are unlikely to track base rates higher - just as they didn't track them lower.

I'm not confident that the Tories will win the next election.

Whether fixing or not is a good idea at the moment I don't know. If you can afford to take the gamble, I'd stick with a tracker.

GG

Muhasib

"The Tories may well wish to follow their normal policy of higher rates to satisfy the rich regardless of the impact on the economy."

G George - just how do low interest rates help pensioners who have seen large falls in the interest income on their building society savings?
It is actually the rich who have leveraged their mortgages and taken equity withdrawal on the largest properties who are now disproportionately benefiting from the current low interest rate environment.

opinions4u

just how do low interest rates help pensioners who have seen large falls in the interest income on their building society savings?

A low interest rate that is higher than inflation is better than a high interest rate that is lower than inflation.

Gorgeous_George

muhasib wrote: »

"The Tories may well wish to follow their normal policy of higher rates to satisfy the rich regardless of the impact on the economy."

G George - just how do low interest rates help pensioners who have seen large falls in the interest income on their building society savings?
It is actually the rich who have leveraged their mortgages and taken equity withdrawal on the largest properties who are now disproportionately benefiting from the current low interest rate environment.

o4u answers the first part well enough. The Tories' rich don't have mortgages. Also, I don't quite understand the why rich people do not experience the effects of low interest rates but pensioners do.

The workers and those less fortunate tend to pay more so that the Tories rich can pay less.

GG

stueyhants

Gorgeous_George wrote: »

I'm confident that the impact on the average person would have been far greater without Gordon Brown's vision and leadership.


GG

I almost fell of my chair when I read this. Gordon Brown's vision is running up the UK biggest debt since WW2, selling off our Gold at record lows (whilst annoucing what he was doing causing the price to fall even further).

We would be in a similiar mess if the Tory's were in power over the last 10 years, but the big difference is the debt levels would be much lower.

Labour always run out of other people's money to spend eventually.

Gorgeous_George

Have you heard of Norman Lamont?

Black Wednesday - the funniest day in politics. Well, it made me laugh.

GG