Bank of England rates could rise more than thought

westernpromise

Also note that base rates =/= mortgage rates. Base rates may be low but mortgage rates are around 3 to 4% depending on property, gearing etc which is a much larger diff over base rate than in the past. Hence historic mortgage rates have usually been around 4 to 5% meaning they're still in line with that.

The aberration was 1970 to 1995. For the last ten years we've had chepa rates and it's still possible to buy a cheap fix for another ten, which is 80% of a mortgage term.

economic

The one tail risk that could occur is a debt crisis that would cause rates to sky rocket.

Before we get full scale AI that would result in costs falling to near 0, we could end up with defaults in unfunded liabilities that look quite scary currently and could even result in a moratorium in government debt. Something that is being under priced by the market but could well be an issue in the coming years/decades as the population ages. But as with anything with the economy, incredibly hard to predict if and when. It would be foolish to prepare for imo. Much better to see the economy as growing and making most people wealthier with ample amount of options and choices. There are a lot of smart people doing exciting things that will be beneficial for humanity.

Jonbvn

Filo25 wrote: »

Inflation came in weaker than expected this month, while at the start of the year I thought we would be looking at anywhere between 1-3 rate hikes this year I would say 3 is pretty much off the table at this stage, inflation looking more subdued than expected and some signs of weakness in patches of the broader global economy

The value of sterling is probably driving this. An interested rate increase now, would likely exacerbate this.

michaels

What do you call someone who changes their opinion when the facts change?

http://www.bbc.co.uk/news/business-43831159

....Mark Carney :rotfl:

Graham_Devon

michaels wrote: »

What do you call someone who changes their opinion when the facts change?

http://www.bbc.co.uk/news/business-43831159

....Mark Carney :rotfl:

He has become the cities biggest joke.

Part of the reason we can't now raise rates? The beast from the east. I mean, come on. What next?

Now, his statement after all he has said over the past 3 years is "I don't want to get too focused on the precise timing".

Financial times now referring to him as "carney-age"

Filo25

I don't think its ludicrous though, at the start of the year it looked like the global economy might finally be hitting on a period of synchronised growth with increased inflationary risk as a result, since then we have seen pockets of weakness appear, some of the EU data is looking a fair bit weaker than expected, and the UK has had some areas of concern, combine that with inflationary pressures looking slightly weaker than expected and there is probably a need to re-evaluate.

I still think we will probably see an increase in May although that isn't nailed on now by any means, I wouldn't be surprised at this stage if we only had 1 increase this year.

westernpromise

You can still get five year mortgage fixes at 1.88% so I don't see anything too radical happening.

AG47

ilovehouses wrote: »

I stopped listening to him years ago. I'm now near the end of a four year fix I took out when he said rates were definitely maybe going to increase.

The facts have changed though - not least the part recovery in sterling which should make a rate rise less likely.

Of purse rate rise is likely, the only question is how long it will take to get back to normal

thor

The politicians will never want to raise interest rates back to pre credit crash levels for two reasons.
1. Despite the boasts, the economy has not recovered.
2. The cabinet will not want their property empires to lose value.

Thrugelmir

thor wrote: »

The politicians will never want to raise interest rates back to pre credit crash levels for two reasons.
1. Despite the boasts, the economy has not recovered.
2. The cabinet will not want their property empires to lose value.

Polticians no longer control interest rates the MPC does. :cool: