Rate increase in March - Will it happen or not?

UK007BullDog

I am confused.......

My analytical mind tells me that another rate increase is on the books due to the rampant house prices. Supposedly 100 buyers are chasing one property and every viewing produces an offer. People are still buying no matter what but even income multiples of 5 or 6 times are starting to not be enough help to FTB. So the rates have to go up?????


The other side of my mind says with a record number of repossessions, IVA's, Bankruptcies etc there just cannot be a rate rise as so many people are struggling already and another rate rise might just be what could send them from just barely managing to no longer managing at all.

So what do you think?

A rate rise from currently 5.25% to 5.50% in March? Or will it stay and a rate rise might happen maybe in April or May?

Bank of England will decide on the 8th of March 2007.

raq

if at all am hoping for nothing, but it never happens like that does it. my husband recently gone self employed and although we only have the mortgage it's still a worry. I sent a similar post just before the other increase and as loads of post regarding this.

interesting to follow this

toonfish

gut feeling is not next month, possible slight fixed rate reductions on the horizon from the lenders apparently

talksalot81

Given that the official inflation figure used by the BoE does not include housing, rampant HPI is no reason to expect an increase. At this point I have not read many reports which lead me to believe that CPI is going to be up on last month so I see little reason why the bank will raise rates. Of course this is neglecting the real story, but that appears to be bank procedure at the moment.

Generali

I think no rise in base rates. However, given the dash for quality that appears to be going on today, don't rule out higher mortgage rates anyway.

roswell

Well I was well off the mark last month so im goign to stick with that trend, As Merv has said that low inflation is becoming a thing of the past i think they really shoudl go to try undershoot the target so a 0.50 % raise like i said last month.

Lets be honest these 0.25% shifts arent making any impact.

UK007BullDog

Interesting Roswell,
but a double increase in one go might scare some economists and start a housing crash ???

roswell

Looking at inftlation its been hovering over 2.5% for some time we have had a few 0.25% increase`s but this isnt bring down inflation, really i dont believe you can control inflation with interest rates but you can control available income to a degree.

If I was over shooting a target consistantly and 3 attempts to bring some control hadnt worked id be looking at more drastic action.

As for housing I think its fair to say the most of the population dont link the IR with the value of there house and this is why the market is still growing, After all as long as they can afford the monthly payment they will stay there its only when income runs out or debt increases to a unsustainable level that they then look at taking value out there property or selling and downsizing / renting. I dont believe a 0.5% increase would cause a crash but it may bring spending under controll some what.

ManAtHome

Gone for the quarter percent increase on the grounds that:
a) The BoE have put up with inflation above target for around 9 months and just bunged in the odd quarter now and again (that's why I'm not in the 0.5% camp).
b) Pay rise negotiations are based on past inflation - nobody is going to settle on the forecast for medium-term inflation and accept a 3% pay rise if they can help it (especially as inflation has been consistently under-estimated for the last year). Already signs that (some) pay settlements are on the up and I think a few problems when they offer 2% max to the public sector.
c) The £ went up against the $ by 15% last year so we're unlikely to have quite the same cushion against import costs (mostly priced in $).
d) Somebody at the BoE might have been awake when the Bank of China decided it was seeing too much money being loaned so people could speculate on assets which have been rocketing in price...

However, they're just as likely to sit on their hands whilst professing dismay at the increases in pay, asset prices, and consumer debt. About par for the course as they've already allowed more personal debt since 'independence' than all the Fat Controllers put together since time began (debt was around £550 billion when they took over, now around £1,300 billion).

roswell

oops a blatant bump

UK007BullDog

Hi Roswell,

Do you ever sleep? Or are you working night shifts? 3:16AM you bumped up the post but so far very good comments, hope some more people will add their opinions.

Thanks.