Your prediction on the bank of England interest rate

Jonbvn

luckyfool wrote: »

Mortgage strategy magazine (an industry publication) show a graph of swap rates every week. This shows the cost of 1 yr, 2yr, 3yr and 5yr fixed rate money in the financial markets. This is normally the market lenders go to for funding their fixed rate mortgages and give you a good idea of where the market expects rates to go in the short, medium and long term. The most recent issue quotes 1 year money at 6.01%, 2 year at 5.72%, 3 yr at 5.65%, and 5 yr at 5.54%.

So in the 5-yr term, the market is predicting rates to fall slightly, or perhaps remain stagnant?

luckyfool

Jonbvn wrote: »

So in the 5-yr term, the market is predicting rates to fall slightly, or perhaps remain stagnant?

Pretty much, though the swap rates do price in a risk premium as well so I would expect rates to be lower than that. I would say a more realistic 5 yr average for the BOE rate from today is about 5.1-5.3%

free4440273

As long as the BofE keep telling us that CPI is at 1.8 per cent:rotfl:then there are always scope for cuts. This Thursday: I would say a hold but then again they might just cut by .25.

Dan_Collins_2

I see a cut of maybe .25% in Feb, I doubt before XMAS.

Also Swap rates have dropped from around the 7% to nearer 6% and we have seen a drop in fixed rates over the last few weeks. Also Mortgage books are being sold again and a sub prime lender is on the verge of selling their book and this will be a major step forward for that sector.

On the down side I think the worst is yet to come in the US, so it depends on how this hits us. Subprime Lenders are cutting jobs over here so who knows!

free4440273

^worst is yet to come here also i think :eek:

[Deleted User]

Im going to say they will hold it, but I believe they should put it up to 8% kill off the enefficiencys in the economy such as the housing bubble and struggling ventures.

If they cut it they are idiots, so I dont rule out a 0.25% cut.

free4440273

...they were idiots in August 2005 :rolleyes:

raq

luckyfool wrote: »

This post made my head hurt.

Yeah me too. How did the figures work out

We pay £887.00 over 23 years on a £132,000.00 mortgage:cool:

Dan_Collins_2

Yant1 wrote: »

Im going to say they will hold it, but I believe they should put it up to 8% kill off the enefficiencys in the economy such as the housing bubble and struggling ventures.

Do you have a mortgage??

If they cut it they are idiots, so I dont rule out a 0.25% cut.

The problem lies back when they were lowered, not being hired. However an 8% would put so much pressure on mortgagee's it would just pop! I worry about my clients now, coming off of 4.5%'s to 5.5%'s or worse.

We had a client call today, he had a 5.somthing% fixed rate, he was stupid and got him self a CCJ for being bloody minded (Long story) and now the best he can get is 8.45%

Imagine if the BOE was 8%?!?!

ziknik

You can keep an eye on swap rates here.

http://www.swap-rates.com/UKSwap.html

I'm not sure they really mean anything though. I read an article a while ago in one of the broadsheets, the basic gist was that the banks were refusing to loan at the (LIBOR) rates they were advertising because they wanted to hold on to their money encase they discovered their investments were part made up of dodgy American loans.

I think the interest rates need to be held this month. A raise will nail people already struggling with debt. And a drop in base rate will devalue the pound which will expose us to the ever rising cost of oil and energy.

Over the short term future, I’d expect interest rates to rise. Asian countries such as China and India have kept our interest rates low for years but this trend is beginning to unwind as Asia struggles to get a grip on its own inflation problem.

I wouldn’t put it past the BofE (forced by Brown) to drop 0.25% off the base rate before long, but I don’t think this will help mortgages. I read an article last weekend saying that American mortgage rate have only come down slightly (something like 0.1%) despite a 0.75% cut in base rate.