5 year fixed rate???

OP2011

Peelerfart wrote: »

If the BofE interest rate hits 8% in three years how much of a problem would that cause you ?

If the BofE rate does hit 8%, what might the fixed products about then be?

When the tracker in question would be 9.97%

Just wondered if anyone would know / have educated guess

Radionotme

Rates are not going to hit 8% in 3 years.
Sure, it's theoretically possible, but look at how fast rates went down, and how long they've stayed there. At every meeting the talk has been of 0.25% and the occasional 0.5% rise. 8% in three years would be a 0.25% rise for 2 out of every three months from now for 3 years.

Rates are so low now, despite inflation being so high, because the BoE fears that the economy can't cope with increased rates just yet. Rates will go up, but they'll go up slowly, and the BoE will pause after doing so, to determine the effect.

If by some miracle rates do shoot up, it will only be because the economy is overheating, and if that's happening then what you can afford now will be next to meaningless.

I say that rates will rise next year, but by a quarter to half a percent per (calendar) quarter. If the economy doesn't freefall, then that will be maintained until they hit around 3% - beyond that is anyone's guess.

The BoE has clearly shown that they're ignoring their inflation remit in favour of helping the economy along. The only way that will change is if they're all replaced.