BofE interest rate

gjs6385

Hi,

We are currently on a tracker at the moment and I have read that it is predicted that the BofE base rate will probably start to rise around mid-2011.

But, did I hear on the news yesterday something about it may be as early as next month?

Thanks.
Gareth.

SteveB81_2

It depends what happens with inflation... they may need to raise it if inflation keeps getting out of hand but, and it's a big but, they are reluctant owing to the damage it could do if people stop spending.

I suspect that it would be much later in 2011 but there is a good argument for switching to fixed rate early while they are still at low rates. - Check out the smaller banks and BS's too as some have great rates.

lisyloo

Don't panic on headlines.
There is lots of info here
http://www.thisismoney.co.uk/interestrates

Changes are historically more likely in Feb, May, Aug and Novemebr as the BOE has the inflation report available.
There are conflicting concerns.
Inflation needs to come down but they can't cripple the economy.
There is also a concern about loss of credibility as they don't appear to be targetting inflation which is their remit.
Also people are getting used to low rates and some think a reminder is required.

Feb is the absoltuely earliest and if rate do rise then they'd go up very slowly as we have a crippled economy.

However you must expect rates to go up at some time.
These levels are very abnormal.

Thrugelmir

Start by increasing your monthly repayment now , and in effect overpay.

Rates are going to rise. Every month is one month closer.

Burridge60

gazsharpe101 wrote: »

Hi,

But, did I hear on the news yesterday something about it may be as early as next month?

Thanks.
Gareth.

Hi Gareth.

Governor of the Bank of England didn't suggest that in his speech this week. Google their site and read it. Bookmark it too as it has dates of next meeting of the committee that decide the rates.

PS Might be worth starting to pay more as you inevitably will. Then you are ahead of the game and you dont have to put up with papers sensationalising every day.

The rates are definitely going up ! When who knows. By how much who knows. But during the remaining term of your mortgage they will be higher than today.

Meeper

For what it's worth, I have had reports across my desk from 3 Chief Economists at different banks and I deal with many professional investors and investment bankers who ar all predicting a rate increase by May at the latest, with March or April more likely. This should be followed by some more movement later in the year and I expect base rate to end the year at around 1% or 1.25%.

ellives

Meeper wrote: »

For what it's worth, I have had reports across my desk from 3 Chief Economists at different banks and I deal with many professional investors and investment bankers who ar all predicting a rate increase by May at the latest, with March or April more likely. This should be followed by some more movement later in the year and I expect base rate to end the year at around 1% or 1.25%.

Hi Meeper or anyone

...so am I doing the right thing going for a lifetime tracker? (how long is a piece of string)...

I've always had 3-5 fixed rates and as I'm coming out of one in May I'm now part way thru an application with hsbc fee free lifetime tracker at base+1.99% - attracted to it as it is less than half of what I've been paying for the last 5 years, plus no really attractive fixes available at moment, plus not sure ow long to fix for etc.....

I've £200k mortgage, so not insignificant....but a decent salary, secure etc.

My rationale is that the tracker deal has no tie-ins, allows me to over pay etc....and if and when the rate starts to fly upwards, I could run for cover hopefully not getting too stung, plus the period before they go up (enjoying sub 4% interest, would offset this somewhat - is this sound thinking?

Anyone else flirting with trackers at moment?

Thanks, in advance.

vulcan1964

As a ex financial advisor I always used to say that most (99%) economists never had a clue what was going to happen next in the world of high finance and interest rates.

The big question is why have most of the banks pulled and raised their long term fixed rates already - they are betting that interest rates will rise (BOE base rates have never been so far removed from what the banks are charging).

I will be surprised that anyone in a years time will think that being on a variable rate will be a good idea.

Also the Halifax has removed the link to the BOE rate on new mortgages (Halifax homeowner standard variable rate) currently at 3.90% which can be changed at anytime by the bank if BOE rates rise or not.

Thrugelmir

vulcan1964 wrote: »

I will be surprised that anyone in a years time will think that being on a variable rate will be a good idea.

Mortgages last a lifetime for the majority. So look ahead beyond the relief of a "short term fix".

After 15 years on a repayment mortgage you'll still owe 60% of the capital balance.

Meeper

ellives wrote: »

Hi Meeper or anyone

...so am I doing the right thing going for a lifetime tracker? (how long is a piece of string)...

I've always had 3-5 fixed rates and as I'm coming out of one in May I'm now part way thru an application with hsbc fee free lifetime tracker at base+1.99% - attracted to it as it is less than half of what I've been paying for the last 5 years, plus no really attractive fixes available at moment, plus not sure ow long to fix for etc.....

I've £200k mortgage, so not insignificant....but a decent salary, secure etc.

My rationale is that the tracker deal has no tie-ins, allows me to over pay etc....and if and when the rate starts to fly upwards, I could run for cover hopefully not getting too stung, plus the period before they go up (enjoying sub 4% interest, would offset this somewhat - is this sound thinking?

Anyone else flirting with trackers at moment?

Thanks, in advance.

If I were you, I would take the deal with HSBC on the lifetime tracker but overpay to the equivalent of what you are paying now. That way, if interest rates rise, you can simply reduce your overpayments so that your total payment stays the same and you will be bringing your mortgage balance down much faster than originally expected.

Do we aware, however, that HSBC only allow overpayments of up to 20% of your monthly payment amount, so that would be something to take into account.