Just heard interest rates have gone up

movieman

IMO rates will be back at 5% by the end of the year.

The MPC seem to prefer to sit on their hands rather than bumble around raising and lowering rates on a short-term basis. They took a year to go from the last cut to the first raise, I suspect they'll take just as long to go from the last raise to the first cut.

united4ever

Applied for a 5 year fixed on December 23rd. Have got an application number. They sent me a letter asking me to provide my sort code - I posted the reply on Saturday. My mortgage adviser thinks the rate is secured already but just a bit worried they could put the rate up as I've not received confirmation yet. Do you think this could happen.

pollyanna24

From what I've heard, mortgage companies compensate for when they think rates are going up or down, and don't immediately change their offers on fixed rates, so you should be okay. Nationwide's fixed rates have been the same for a while, they're the only ones I keep an eye on though.

asandwhen

united4ever wrote:

Applied for a 5 year fixed on December 23rd. Have got an application number. They sent me a letter asking me to provide my sort code - I posted the reply on Saturday. My mortgage adviser thinks the rate is secured already but just a bit worried they could put the rate up as I've not received confirmation yet. Do you think this could happen.

unlikely as they normally take a couple of weeks to raise there rates after the boe anyway.

going2die_rich

They should increase them next month too, to punish all those people that have got themselves overstretched just to buy a house!

asandwhen

going2die_rich wrote:

They should increase them next month too, to punish all those people that have got themselves overstretched just to buy a house!

not sure they need to be punished

movieman

The Bank of England are the ones who should be punished, for setting rates at artificially low levels for year after year. Anyone should be able to see that you can't increase the money supply by 10+% per year for long before you'll be hit with high inflation.

BobProperty

movieman wrote:

The Bank of England are the ones who should be punished, for setting rates at artificially low levels for year after year. Anyone should be able to see that you can't increase the money supply by 10+% per year for long before you'll be hit with high inflation.

....except Economists and Politicians.

chris83_2

going2die_rich wrote:

They should increase them next month too, to punish all those people that have got themselves overstretched just to buy a house!

You are one twisted b*stard.

F_T_Buyer

asandwhen wrote:

doubt very much rates will rise to 6% dont forget that the first rise of this sequence was in august 2006 it takes at least a year for rate rises to hit inflation figures. imo we may see another rise this year but that will be it as we see the results of these rises hit inflation and the lower cost of fuel.

IMO rates will be back at 5% by the end of the year.

Remember that this time last year many commentators were saying rates would be falling further (i.e. below 4.5%). The Bank of England said they expected inflation to fall to target in 2006, it didn't. In fact, I would say their models are wrong, and they contradict their own research on oil prices back in 2002.

Shop [consumer] prices are rising, when many expected them to fall. In fact, in the year to Dec the BRC said they were up 2.3%, previous years they had been falling which led to low inflation and low interest rates.

We are heading back to a neutral level in the years ahead. The only reason I would expect them to fall would be because of a recession or a house price crash. But they are many risks the other way, including the overvaluation of Sterling.

6% by year end is quite a reasonable prediction, and should not be so easily dismissed. I'm not sure how high they will go, as no one does, but it's clear to me they will continue to rise.

Edit:

Just to add a bit more, yes interest rates does take along time to work through the system, but so does money (or debt if you will). This is still increasing at around 14% per year, and the last two years money is still filtering into consumer prices. They need to stop this broad money growth, and I think rates will continue to rise until is does slow - interest rate changes will have a quicker impact on broadmoney growth, as this is where inflation starts.