We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
We're aware that dates on the Forum are not currently showing correctly. Please bear with us while we get this fixed, and see Site feedback for updates.

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

15681011

Comments

  • PK_London said:
    mi-key said:
    I think they need to be very delicate now. They have already seen the effect the last increase had on the mortgage rates ( making real inflation, i.e. including mortgage payments a lot higher, not lower ). 

    While they need to keep  the markets happy, they also need to not cause mass defaults and people losing their homes, which ultimately the government will end up having to foot the bill for. 

    Most people can handle their weekly shopping going up by 10%, they can't handle their mortgage payments going up by hundreds a month. 


    As has already been pointed out, whatever the next rate increase by the BoE  it’s unlikely to have much of an affect, if any, on most mortgage rates as it’s already been priced in.

    It looks like there’s going to be quite a lot of pain for many peoples finances for the foreseeable future, with 5% mortgage rates being the new norm. House prices will probably drop and then stagnate for some time. There’s no way to sugar coat it.

     Mervyn King last Sunday.

    https://www.bbc.co.uk/news/business-63364240





    That's quite presumptuous. There's currently a huge 4% gap between base rates and mortgage rates however what we have learnt is that mortgage rates are only loosely tied to BOE base rates. Its the swap rates that matter. There is every possibility that if base rates go up by 75bp next week then swap rates and therefore mortgage rates will follow. US mortgage rates are already at 7% and although they're not directly comparable to UK mortgage rates, they have proven to be the canary in the coal mine.
    This is also quite a presumption. Swap rates are down over 1% across all time periods since the mini budget 5 weeks ago. 5 year swap rate was over 5% in the aftermath of the budget but is now sat at 4%. 
  • Aberdeenangarse
    Aberdeenangarse Posts: 1,261 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    edited 30 October 2022 pm31 8:58PM
    ‘ The economy seems to be heading towards a recession, if it isn’t already in one, and inflation remains uncomfortably high.

    True, lower energy prices and the recent strengthening of the pound will help to contain inflationary pressures. But it still looks likely that inflation will rise from its current level of 10.1pc.

    Most concerning is the fact that the growth of average earnings has picked up to 6pc. Moreover, with widespread anxiety about squeezed real incomes and a threat to living standards, there is every prospect that this rate will rise over the winter amid a flurry of strikes and economic disruption.

    Admittedly, the headline rate of inflation should fall quite dramatically later on next year as sharp rises in energy costs fall out of the annual comparison. But that does not in any way guarantee that inflation will fall back to the 2pc target. 

    Indeed, if the growth rate of average earnings settles at 6pc, with productivity growth likely to run at 1pc at best and quite possibly next to zero, the underlying rate of inflation could easily get stuck at 5-6pc. Accordingly, the pressure is still on the Bank to raise interest rates. 

    Some economists believe that the Bank and its counterparts around the world are uniquely responsible for the current inflation surge, by keeping interest rates ultra-low and expanding the money supply by buying government debt.

    It is true, in my view, that central banks persisted with this policy for too long. They should have moved towards tightening monetary policy earlier and proceeded to tighten more quickly. If they had done so, the upsurge in inflation would have been more modest. ’

    https://www.telegraph.co.uk/business/2022/10/30/nothing-will-stop-punishing-rise-interest-rates2/?li_source=LI&li_medium=liftigniter-rhr

     Whatever the Bank does on Thursday, this is unlikely to be the end of it. To really get on top of inflation, I suspect that the Bank will have to raise interest rates a good deal higher and to keep them there for a while, even as inflation subsides. My best guess is still that Bank Rate will peak at about 5pc.’

  • smipsy
    smipsy Posts: 213 Forumite
    Seventh Anniversary 100 Posts Combo Breaker
    I thought that the bond sell-off, that apparently the whole world was watching, was due to start today? Or is that tomorrow?

    Either way it's awfully quiet about it, it sounds like much ado about nothing
  • smipsy said:
    I thought that the bond sell-off, that apparently the whole world was watching, was due to start today? Or is that tomorrow?

    Either way it's awfully quiet about it, it sounds like much ado about nothing
    It’s too early to say. But there is an article about it, just published on The Independent:





  • Might also be worth a read. 



  • The federal Reserve hikes rates to 14yr high

    How close will the BOE follow tomorrow and high will it effect mortgage rates?

  • PK_London said:
    The federal Reserve hikes rates to 14yr high

    How close will the BOE follow tomorrow and high will it effect mortgage rates?

    0.75% seems certain.

    Will impact those on tracker mortgages but unlikely to impact upon fixed rates. Swap rates down again this week (only fractionally but the right direction). 
  • Cheesy77 said:
    PK_London said:
    The federal Reserve hikes rates to 14yr high

    How close will the BOE follow tomorrow and high will it effect mortgage rates?

    0.75% seems certain.

    Will impact those on tracker mortgages but unlikely to impact upon fixed rates. Swap rates down again this week (only fractionally but the right direction). 
    Current UK Interest rates are 2.25% with inflation at over 10%. Current US interest rates are now at 4.00% with lower inflation. What do we think the BOE will do tomorrow and what do we think mortgage rates will be as a result?
  • london21
    london21 Posts: 2,119 Forumite
    1,000 Posts Third Anniversary Name Dropper
    Predicting rise of 0.5-0.75% tomorrow. 
  • +0.75, maybe +1
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.4K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 241K Work, Benefits & Business
  • 617.3K Mortgages, Homes & Bills
  • 175.7K Life & Family
  • 254.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.