Bank of England MPC meeting November 3rd 2022 - what are your predictions and how are you preparing

K_S

FWIW (not a lot!) my guess is a 0.75% rise in the BOE rate and with respect to mortgages, similar (or slightly lower) fixed rates compared to today.

big_vern

I don't understand the comments that seem to confidently state the mortgage rates won't increase as it's already factored in.

The IMF have said the Truss has introduced a risk premium to the markets, politics is still in chaos, the banks are going to want to maintain that margin for some time imho so the mortgage rates will rise as well. Just my thoughts fwiw

Cheesy77

big_vern said:

I don't understand the comments that seem to confidently state the mortgage rates won't increase as it's already factored in.

The IMF have said the Truss has introduced a risk premium to the markets, politics is still in chaos, the banks are going to want to maintain that margin for some time imho so the mortgage rates will rise as well. Just my thoughts fwiw

Nobody knows for sure, but I think the view is based on there being a 4.25% difference between base rate and average mortgage fixes. This is an unheard of margin. It's normally 1-2% above 

mi-key

Unless there is a big increase in interest rates, i.e. over 2% then the banks increasing mortgage rates will just be greed. At 2.25% interest rate, mortgage rates would normally be 4 - 4.25% There is no reason for them to be 6%.

I think the next week will make a difference as it depends who gets in now as PM, how the pound and the markets respond to Truss resigning etc... It is possible the BoE won't need to increase as much as they were planning 

smipsy

They'll do 0.5 to pretend that the situation is calming down, so they don't have to do 0.75. They will keep the 0.75 as an option if next week goes bonkers.

Realistically, they should be doing a minimum of 1%...

Aberdeenangarse

smipsy said:

They'll do 0.5 to pretend that the situation is calming down, so they don't have to do 0.75. They will keep the 0.75 as an option if next week goes bonkers.

Realistically, they should be doing a minimum of 1%...

They were behind the curve when they raised the rates last month. Do it again and the markets will bomb!

[Deleted User]

CPI inflation figures were very high this week, government yields are soaring today (back above 4% on 10 year gilts) and pound is sinking below $1.11 again. Plus you have the new UK "moron risk premium" and stagflation on the horizon and US rates still going up. I think BOE will have no choice but to keep raising rates at least a bit further, and mortgage rates will be higher in 6 months than they are today.

But I know nothing and there are a lot of binary uncertainties ahead (e.g. is Ukraine headed for peace? stalemate? or nuke?) the answer to which will dramatically change the global picture.

housebuyer143

Deleted_User said:

CPI inflation figures were very high this week, government yields are soaring today (back above 4% on 10 year gilts) and pound is sinking below $1.11 again. Plus you have the new UK "moron risk premium" and stagflation on the horizon and US rates still going up. I think BOE will have no choice but to keep raising rates at least a bit further, and mortgage rates will be higher in 6 months than they are today.

But I know nothing and there are a lot of binary uncertainties ahead (e.g. is Ukraine headed for peace? stalemate? or nuke?) the answer to which will dramatically change the global picture.

I personally think the lenders have overpriced their rates because they don't want loads of applications at the moment, they are swamped. 
Once the markets slow and they are short of business you might see them bringing down the rates to tempt people use them. At the moment, no one needs to be competitive as people are falling over themselves to fix at these crazy prices.

I applied with Skipton in March and spoke to an advisor the next day and applied. Offer in 24 hours, answered the phone in two rings. I called them last week, waited 20 mins to be answered and it was a three week wait to speak to someone. They are not desperate to get more business that's for sure.

PK_London

housebuyer143 said:

Deleted_User said:

CPI inflation figures were very high this week, government yields are soaring today (back above 4% on 10 year gilts) and pound is sinking below $1.11 again. Plus you have the new UK "moron risk premium" and stagflation on the horizon and US rates still going up. I think BOE will have no choice but to keep raising rates at least a bit further, and mortgage rates will be higher in 6 months than they are today.

But I know nothing and there are a lot of binary uncertainties ahead (e.g. is Ukraine headed for peace? stalemate? or nuke?) the answer to which will dramatically change the global picture.

I personally think the lenders have overpriced their rates because they don't want loads of applications at the moment, they are swamped. 
Once the markets slow and they are short of business you might see them bringing down the rates to tempt people use them. At the moment, no one needs to be competitive as people are falling over themselves to fix at these crazy prices.

I applied with Skipton in March and spoke to an advisor the next day and applied. Offer in 24 hours, answered the phone in two rings. I called them last week, waited 20 mins to be answered and it was a three week wait to speak to someone. They are not desperate to get more business that's for sure.

I think this is the key and the reason for people not to panic into locking an expensive rate. Mortgage rates in the US are around 7% which is where I think we will peak. Banks can't seem to keep up with demand so setting rates artificially high should ease their burdens. I expect mortgage rates to stay more or less flat until next summer.

We still seem to be in a world where mortgage rates are in Autumn 2022 territory whereas property prices are still in Summer 2022 territory. I think even with a few more base rate rises and mortgage rates nudging up a bit. Being a tortoise over a hare may work out if in a few months time property prices are lower for new buyers.

In my industry I am seeing massive wage inflation taking place and little to no sign of a recession. If this does feed through into the wider economy we may yet end up in a scenario where despite higher rates, property property affordability may be improved in a few months time over today.

simon_or

My crystal ball says 0.5% bank rate rise and slightly better mortgage rates by mid/late Nov once a Sunak-Hunt govt. is bedded in.