My first thread in this sub forum will be the defining moment for a generation

Mistermeaner

http://www.bbc.co.uk/news/business-33560035

Or at least make savers happy and some mortgage payers a bit less wealthy.

Generali

ggb1979 wrote: »

http://www.bbc.co.uk/news/business-33560035

Or at least make savers happy and some mortgage payers a bit less wealthy.

TBH I think all that has changed is that interest rate rises being about a year away to being about 3-6 months away.

Don't get me wrong, interest rates will rise. There is quite a long history now of them not happening when market guidance has said they will.

cells

link suggests that the new normal is half the 'normal' of 4.5% over the life of the BOE that is to say interest rates will go to 2% maybe 2.5%

Generali

cells wrote: »

link suggests that the new normal is half the 'normal' of 4.5% over the life of the BOE that is to say interest rates will go to 2% maybe 2.5%

We'll see. This Time It's Different are great words to lead investors to lose money.

FWIW, the fixed income guys at work reckon that indebtedness is such that a lower rate of interest is needed to suppress inflation. It'll be interesting to see what happens the next time inflation ticks up a bit or more importantly inflation expectations rise.

NICHOLAS_2

cells wrote: »

link suggests that the new normal is half the 'normal' of 4.5% over the life of the BOE that is to say interest rates will go to 2% maybe 2.5%

Over 3 years, ish.

The first rate rise will probably be .25 or .5 making interest rates 1% or less for presumably a year

If they up it too fast lots of people will be getting their homes repo'd,

Mistermeaner

Certainly glad I signed up for that 10 year fixed rate mortgage.

At 4.98%

In 2007

Well done me

PasturesNew

When I sold my house in 2007, "they" were saying that mortgage interest rates would be going up, up .... and I banked my cash at 7% with Sainsburys. That didn't last long!... down, down, down went those rates.

Generali

PasturesNew wrote: »

When I sold my house in 2007, "they" were saying that mortgage interest rates would be going up, up .... and I banked my cash at 7% with Sainsburys. That didn't last long!... down, down, down went those rates.

Could have been worse, you could have invested the money into Greek Bonds....

gazter

NICHOLAS wrote: »

Over 3 years, ish.

The first rate rise will probably be .25 or .5 making interest rates 1% or less for presumably a year

If they up it too fast lots of people will be getting their homes repo'd,

Extremely unlikely. No one has ever been sold a mortgage in recent times in which affordability of repayment at 7% was not discussed and checked. There may be some considerably tightening of belts for some, as we've all got used to 1% base rates, and products around that.

Every 1% rise would cost me just short of £100 extra month. It wouldnt break the bank, but would leave me with a £100 less for other things.

chucknorris

As Gen said above Carney hasn't really said anything that we didn't already 'know' (expect), rates might go up a little earlier than expected, but even so they would have been rock bottom for almost 7 years. Possibly even better than that, is that the long term base rate new 'norm' might be sub 3%. Again, that was already an expectation, but reinforcing that notion spells out that overall that this is good news, not bad. I think Carney is simply trying to head off any unnecessary concerns about the inevitable, by getting us used to the idea, it is certainly getting enough coverage in the news.

wotsthat

Carney strongly indicated around this time last year that rates would rise in September 2014. I'd started to look at 5 year fixes already but his comments fed my confirmation bias and I pushed ahead and fixed. His comments mean I, and others, will have fixed rates expiring 18- 24 months before they needed to undoubtably into a higher rate environment.

His first foray into forward guidance also indicated rates would have been raised some time ago.

He may as well just be honest and tell us rates will rise about two months after the Fed raise theirs.