Interest Rates heading up due to rising inflation so fix now while you can?

coypondboy

Inflation is likely to go up as the price of goods is rising due to a combination of BREXIT, COVID and shipping container costs and all the money being pumped into the system by the Bank of England.  Long term gilt yields are starting to rise so this will feed into fixed rate mortgages so if you need to fix now

roddydogs

Great news I'm a saver, rates have never been so low.

clueless_but_curious

There has been no indication from the Bank of England that base rates will increase.  Even if base rates do tick up, it does not mean lending rates will increase.  Banks have been taking more margin since the drop from 0.75% to 0.1%

dunstonh

Inflation is likely to go up as the price of goods is rising due to a combination of BREXIT, COVID and shipping container costs and all the money being pumped into the system by the Bank of England. 

That is too narrow a way to look at inflation.  There are positive influences and negative influences and then you have overall monetary policy and objectives.
Raising interest rates reduces the amount of money available in the economy. it is typically used when an economy is overheating which can lead to inflation.     In the current situation, it is not overheating economies that need control. it is supply and demand.   So, interest rates do not need to rise in the short or even medium term. Currently, the likely movement, if any, is downwards still.

One of the reasons long term yields would be beginning to rise is the anticipation that both the US and the UK (and others) will use inflation to erode a lot of the long term debt built up due to Coronavirus.     This method has been used before to reduce debt in real terms.   To achieve that, they have to keep interest rates lower than they would be during more normal times.

That is not to say that fixing your interest rate is a bad idea.  However, I am only questioning the reasons you have used to justify it.  Second-guessing global interest rates is impossible as there are too many influences and unknowns.

enthusiasticsaver

I do not think they will raise interest rates while  a recession is possible.  Also the amount of government debt would be impacted by any rise in interest rates. 

ACG

The government are handing money our hand over fist to put their arms around businesses and keep people in jobs and you think an extra 50p on your shopping bill is going to result in higher rates? Tesco have already come out and said that they reckon they can take the extra costs of the new trade agreement as it is basically just paperwork. 

Higher interest rates means businesses and consumers have higher costs, that means less spending and more businesses going under. Im not financial genius but charging more when we are on a knife edge of scraping through or mass redundancies does not seem like the best way forward. Added to that, inflation is actually wanted - the alternative is a recession? 

ytfcmad

So basically the OP is talking out of his/her backside.  

Thrugelmir

If inflation does rise. Then investors will demand a higher return to purchase Government debt. As a consequence the cost of borrowing may ripple out. With the cost of raising funding for lenders will increasing. There's no simple solution to the damage that Covid is going to leave behind. The extent of the real damage is yet to be seen. 

Getting_greyer

Not gonna be any significant base rate rise for years.  

coypondboy

If you have a big mortgage and with 5 and 10 yr fixed rates so low would you want to take the risk.  I remember the 90's when interest rates hit 15% so no guarantees of what the future holds just saying if you don't want to risk it longer term fixed rates have never been so low and you can always go back onto tracker rate at end of period.  I have done this myself for piece of mind  but in the lucky position where mortgage will be paid off in 5 years so did not want to take the risk.