Poll: Will the Bank drop rates on Thursday?

westernpromise

So will the BoE drop rates?

My BTL mortgage is a tracker and it's already farcically cheap, costing £311 a month against a rent of £2,400. If rates went to 0.05% it would mean one month's rent paid one year's mortgage interest. Extraordinary, really, but you can't buck the markets as the Lady said.

So - what'll happen?

buggy_boy

You may want to check the small print, if its a recent mortgage it may have a collar meaning many on trackers will not see the benefit of a rate reduction.

cells

Real interest rates will be close to zero from now on (arguably they have been for close to a decade already)

What this means is theoretically it will lead to a house building boom. If we look at Germany we see that

2009 = 159,000 new builds
2015 = 270,000 new builds

Almost double the rate. Of course the UK with its fixed rigid planning rules has bit seen anything like the same boom in construction.

'Low interest rates have fuelled an increase in housing construction, the Bundesbank has said'

The boom in construction helps create lots of additional jobs and also should keep rents more modest.

westernpromise

buggy_boy wrote: »

You may want to check the small print, if its a recent mortgage it may have a collar meaning many on trackers will not see the benefit of a rate reduction.

It's from 2007 and is a vanilla BoE tracker, so it should flow straight through.

michaels

Obviously give how low rates are any cuts are more a signal of intent rather than having a huge impact on the market.

Could they actually be counter-productive, feeding the 'economy is forked' paradigm which will be self-fulfilling if people stop spending, companies stop investing and hiring because 'everyone says there is going to be a recession'....

luvpump

.25% is gonna make a massive difference isn't it lol

chucknorris

luvpump wrote: »

.25% is gonna make a massive difference isn't it lol

£1,700 gross interest saved per annum for us.

Graham_Devon

What data is there to back this decision up?

The pound falling? Well this will make it fall even more. Indeed, the pound fell significantly twice following brexit after "more words" from Carney. The two times he announced what they may do both sent the pound falling a larger amount than the actual referendum did.

Considering all the stuff we have been through in the last 6-7 years, periods of inflation etc and nothing was ever done to interest rates, what's the catalyst now apart from "Brexit".

mwpt

Graham_Devon wrote: »

What data is there to back this decision up?

The pound falling? Well this will make it fall even more. Indeed, the pound fell significantly twice following brexit after "more words" from Carney. The two times he announced what they may do both sent the pound falling a larger amount than the actual referendum did.

Considering all the stuff we have been through in the last 6-7 years, periods of inflation etc and nothing was ever done to interest rates, what's the catalyst now apart from "Brexit".

The most likely explanation is that the BOE and financial stability "people" watch a bunch of indicators and are concerned about something. So they are preempting things by pulling their single trick rabbit (lowering interest rates) out the hat.

Or we could go with the tinfoil hat pass the parcel blame methodology of brexiteers and conclude that "the powers that be" are engineering a crash to discredit the brexit campaign.

I'm gonna go ahead and roll my eyes at that one.

Rinoa

Graham_Devon wrote: »

Well this will make it fall even more. Indeed, the pound fell significantly twice following brexit after "more words" from Carney. The two times he announced what they may do both sent the pound falling a larger amount than the actual referendum did.

They don't pay him an £800,000 salary for nothing. If the pound fell after his comments, I expect that's what he intended.

Graham_Devon

Carney seems to be getting extremely political today.

He's so far attacked Lord Lamont and Boris Johnson personally. He has covered this political "intervention" by stating his job is to speak out.

He's also sheltering Osborne and suggesting he's done a grand job etc.

The select committe is currently grilling him on whether the BOE themselves exaggerated the risks of Brexit, and essentially, whether the speeches since have been designed to "cause" further damage.

Essentially they are asking what I asked yesterday in a roundabout way - but don't seem to be getting very far. Just a wooly answer of "it is their judgement that brexit will cause downside risks".