Will Kwarteng’s U-turn mean lower interest rates?

Nailer99

Tough times. Good luck everyone. 

Nailer99

Looks like Jeremy Hunt is entirely taking over with a much more fiscally conservative economic policy, so I’m a little more optimistic now. 

How politically sustainable that is, for the chancellor to be running the county and ignoring the PM’s economic policy is another question. 

Aberdeenangarse

It looks like the next increase from BOE is going to be a large one!

https://news.sky.com/story/interest-rate-rise-could-be-higher-than-expected-next-month-bank-of-england-chief-suggests-12721123

tony3619

Aberdeenangarse said:

It looks like the next increase from BOE is going to be a large one!

https://news.sky.com/story/interest-rate-rise-could-be-higher-than-expected-next-month-bank-of-england-chief-suggests-12721123

The real question is whether banks have already factored in this November rise into current fixed rates.. 

billy2shots

Nailer99 said:

Kwarteng’s “Mini-budget” caused a chaotic collapse in the markets which has caused banks to hike their interest rates.

Now that he’s u-turned, hopefully we expect mortgage rates to come down again, at least a bit. 

Can anyone please post here any evidence of rates falling again?

Or am I being naive?

GAMBITv5 said:

Marginally, yes. Expect them to peak around 5.5% instead of 6% - don’t expect many lenders to climb down from their latest rates, more lengthen the time between further rises…

Two different conversations going on here. 

Will they come down? No (not soon)

Will they peak slightly lower than they might have done? Nobody will ever know. 



Sorry to be pedantic, I would hate for someone to hold off making a financial decision thinking rates might be coming down soon. 

Of course we could extrapolate. Will they EVER come down? Yes they will. 

housebuyer143

Aberdeenangarse said:

It looks like the next increase from BOE is going to be a large one!

https://news.sky.com/story/interest-rate-rise-could-be-higher-than-expected-next-month-bank-of-england-chief-suggests-12721123

Could, maybe, potentially... No one knows and so I find articles like this are just printed to get clicks.

RogerPensionGuy

The stuff I view appears to be saying. 

Central banks will get interest rates up to between 5&5.75% by April to June 2023 and stay in this range for 18 months to 2 years to sort inflation issues. 

Mortgage deals are often 2 or 3% above bank rates depending on LTV and credit history etc etc.

Some people I know whos deal runs out Xmas time 2023 are looking to remortgage now for a 5 or more years deal.

It just looks like the free and cheap money train is now history, the future looks more normal. 

The UK and other countries have just wound up house prices via free or cheap money and now some people have monster debts in the next phase coming, governments, regulators and banks have all play their part in this arriving mess.

Nailer99

I do think there’s scope for some of the “the-sky-is-falling-in” 6.5% 5 year fixes that appeared right after the Mini budget to come down in rate. And also many banks have withdrawn products while they wait for the situation to stabilise so as more competition appears in the market place there will be cheaper deals (by a little). 

I’m expecting a 1% drop at most, but a bit of a drop. 

Koldweather1

I think Jeremy Hunt will probably stabilise things, but the OBR report looks worse than expected, so the calm hand of Hunt may only counteract the terrible OBR news.

I suspect the budget will be rough and more honest than Kwasi's mini budget of hope. What I suspect will happen is mortgage rates stay high but don't increase when the IR rates increase.

So rather than a come down, they just edge closer to the IR as it moves up. Any slight drop from the 6% range will obviously help, but at this point most families remortgaging are going to have to find hundreds extra a month.

On top of inflation, there is going to be a very sharp drop in consumer spending in the next 6-12 months as more and more are hit by either higher energy, higher mortgage/interest rates, or both.

TonyTeacake

It looks like long term interest rates are only going one way and that is up.

Higher interest rates look like they are going to be here for a very long time, I can't really see them coming down for quite few years at least. As long as we have high inflation numbers I can't see interest rates coming down anytime soon. This will cause a lot of pain in the housing market which I have seen coming from the beginning of this year. The longer inflation stays high it will be disastrous for the economy. Expect to see house price drop over the next 2-3 years by 20-50% depending on where you live. Fixed rate mortgages are now 6% which has killed the affordability for most FTB.

We all should be prepared for some very nasty shocks in the economy over the next couple of years. I wouldn't be surprised if we have a Black Swan event.