U-Turn on Mortgage Interest Rates

dosh1

Recognizing that crystal balls are working very hard at the moment with the current economic climate and that it would appear most if not all the problems we now have stem from our new PM and ex Chancellor growth,growth,growth strategy.......

Do you think that if our PM were to resign soon and things calm down that we might see a u-turn in mortgage rates (down not up) bearing in mind it would appear that most other aspects have seen a u-turn?  Or was it just coincidence that rates climbed.  

My hope is that calm may see the rates to decrease in the coming weeks and months or is that really not realistic?

Bubblebutt9

No I really can’t see it happening. Inflation is 10% and the Bank of England will want to reduce this. For me rates are only going to increase. 

ader42

In my humble opinion rates will rise again next month no matter what happens with the PM.

The BOE mandate is to reduce inflation and the means they have to try and do that is raising rates - it is believed rates will rise by 0.75% from Nov 3rd - this increase will be added to mortgage rates.

Rates will likely then rise again in January and then again…

simon_or

dosh1 said:

My hope is that calm may see the rates to decrease in the coming weeks and months or is that really not realistic?

Barclays are already (slightly) reducing rates, though they're only doing it through some brokers for now.

https://forums.moneysavingexpert.com/discussion/6395742/mse-news-whats-happening-to-mortgage-rates-following-the-mini-budget-reversal-mses-analysis

ader42

Bank of England to launch record rate rise to step up fight against 40-year high inflation:

https://www.cityam.com/uk-inflation-rises-to-10-1-per-cent/

dosh1

There's such conflicting information isn't there.  How is one supposed to make the right decision?

dunstonh

Do you think that if our PM were to resign soon and things calm down that we might see a u-turn in mortgage rates (down not up) bearing in mind it would appear that most other aspects have seen a u-turn?  Or was it just coincidence that rates climbed.  

No.  Rates were already increasing fast before Liz Truss was selected.    

Basically you are seeing an unwinding of the credit crunch QE happening over 12 months instead of the decades they hoped for.  Part of the issue has been the US strong dollar and acting quickly to rise rates vs the BoE being very sluggish to rise rates.   Liz Truss's poorly considered mini budget was just a sideshow for events that were already occurring.

K_S

@dosh1 Swap rates and volatility spiked after the budget, which very soon showed up in the chaos that you had in the mortgage market for a few weeks.

Things have calmed down significantly since the reversals and change in guard at the top and 5 year swaps seem to have settled well below 5%.

There are already signs of lenders getting more comfortable with pricing and releasing new products, Barclays reducing rates (albeit on limited distribution) and fwiw I think mortgage rates will now hold steady and perhaps take a slight dip in the coming months once lender service levels are back to normal.

That's just my opinion, who knows what'll happen

dosh1 said:

Recognizing that crystal balls are working very hard at the moment with the current economic climate and that it would appear most if not all the problems we now have stem from our new PM and ex Chancellor growth,growth,growth strategy.......

Do you think that if our PM were to resign soon and things calm down that we might see a u-turn in mortgage rates (down not up) bearing in mind it would appear that most other aspects have seen a u-turn?  Or was it just coincidence that rates climbed.  

My hope is that calm may see the rates to decrease in the coming weeks and months or is that really not realistic?

mi-key

In reality, the lenders don't need to increase rates anymore. They have already built in the future interest rate rises into the 6% rates.

Interest rate is ( only ) 2.25% normally we would expect that to translate to mortgage rates of around 4% ish on the better deals, but they went straight up to 6% 

mi-key

They did say on the news the only reason Truss is still in is that the cabinet can't agree on a replacement for her  I hope she hasn't unpacked everything yet as I can't see her being at number 10 much longer

Cheesy77

mi-key said:

In reality, the lenders don't need to increase rates anymore. They have already built in the future interest rate rises into the 6% rates.

Interest rate is ( only ) 2.25% normally we would expect that to translate to mortgage rates of around 4% ish on the better deals, but they went straight up to 6% 

Spot on. They've already priced in further rate rises into their mortgage products on offer now. Its pretty obvious rates will go up further, so they'd have been daft not to. But no reason to expect mortgage rates to go any higher than currently unless we see base rates getting to 5+% (currently looking unlikely)