Are we expecting BOE to remain at 4.75% on 8th February 2025?

lojo1000

Absolutely no need to cut rates for the foreseeable future in the UK or US.

Why cut rates with full employment and inflation above target and asset prices rising?

From here, it is likely govt deficit spending will remain loose and will keep monetary policy restrictive.

Hoenir

Average 30 year fixed term mortgage interest rate was 7.22% in the USA last week. A very different housing market. That faces considerable changes given the number of borrowers locked in at lower rates that now have zero inclination to move. 

ReadySteadyPop

Hoenir said:

smipsy said:

If banks are now rushing to raise rates, then clearly BoE is not going to cut rates this month

There's been no recent indications the BOE ever would. The increases in base rate from 18 months are only just filtering through.  Long road remains ahead. 

All the indications were on social media and in the MSFM, Bloomberg have been literally howling for rate cuts every day since they started to rise, LOL. Anything can happen but I think rate cuts now would be a sign of serious economic weakness or a major crisis.

RelievedSheff

The BOE will not cut rates this month. 

Media speculation does nothing to help the situation.

If interest rate and mortgage rate "articles" were not in the media every ten minutes people would just be going about their lives as normal instead of putting off major purchases because there "may" be a rate cut on the way.

ReadySteadyPop

RelievedSheff said:

The BOE will not cut rates this month. 

Media speculation does nothing to help the situation.

If interest rate and mortgage rate "articles" were not in the media every ten minutes people would just be going about their lives as normal instead of putting off major purchases because there "may" be a rate cut on the way.

People can`t afford the monthly debt payments anymore, one or two small rate cuts won`t solve that, it is a price cut that is required now.

Hoenir

ReadySteadyPop said:

Hoenir said:

smipsy said:

If banks are now rushing to raise rates, then clearly BoE is not going to cut rates this month

There's been no recent indications the BOE ever would. The increases in base rate from 18 months are only just filtering through.  Long road remains ahead. 

All the indications were on social media and in the MSFM, Bloomberg have been literally howling for rate cuts every day since they started to rise, LOL. Anything can happen but I think rate cuts now would be a sign of serious economic weakness or a major crisis.

Headlines create clickbait. The real world of finance is akin to an iceberg. It's the 90% hidden beneath the waterline that's the problem. 

RelievedSheff

ReadySteadyPop said:

RelievedSheff said:

The BOE will not cut rates this month. 

Media speculation does nothing to help the situation.

If interest rate and mortgage rate "articles" were not in the media every ten minutes people would just be going about their lives as normal instead of putting off major purchases because there "may" be a rate cut on the way.

People can`t afford the monthly debt payments anymore, one or two small rate cuts won`t solve that, it is a price cut that is required now.

I'm not so sure you are right there.

Yes there will be people around the fringes who are struggling or starting to struggle but on the whole I think the vast majority of people are managing just fine with the rate rises.

The percentage of mortgage accounts in arrears is still low which suggests that people are finding ways to balance their budgets.

Lets not forget that not all homeowners have a mortgage. 30% give or take own outright. 

MeteredOut

ReadySteadyPop said:

RelievedSheff said:

The BOE will not cut rates this month. 

Media speculation does nothing to help the situation.

If interest rate and mortgage rate "articles" were not in the media every ten minutes people would just be going about their lives as normal instead of putting off major purchases because there "may" be a rate cut on the way.

People can`t afford the monthly debt payments anymore, one or two small rate cuts won`t solve that, it is a price cut that is required now.

Please don't take this personally, but since exiting the property market a few years ago, you're now starting to sound desperate for a house price crash (not just this post, but the underlying message across most of your posts).

I doubt its going to happen - people will just not move. It's not like 2008 where so many people we overleveraged on their property and had to sell. This time, the affordability rules have ensured that the majority can still cope their mortgage payments and will accept a squeeze elsewhere in their lives rather than selling for below what they perceive is the true value of their house.

lojo1000

Employment is high and banks will work hard to ensure you at least meet the interest cost on your mortgage.

There is therefore very little distress and downward pressure on house prices even though the cost of purchase is at historical highs.

But the employment situation relies on government maintaining large deficits. Remember, we currently have full employment and yet govt are running deficits and - in the UK - growth is basically zero.

To stimulate growth further - with full employment - govts need to increase the deficit which may give growth a short term fillip but will add to wage and inflation pressure. This in turn puts pressure on interest rates to stay high.

If govts try and balance the budget and place the responsibility on the private sector to create growth, employment and growth will fall in the short term. If this creates a crisis in confidence, then spending falls, employment falls and defaults start to occur at a faster rate.

So, i'm watching govt fiscal policy - will they continue to spend and pretend?

Expect the govt rhetoric to change to "deficits are good and there is no need to have a balanced budget".

Exodi

While I hope there will be a rate cut (for selfish reasons - I have a rate switch on the 1st July, taking me from 1.99% to 4.99%, an increase of about ~£300 p/m), but when I think of the wider picture I don't think there should be, nor expect there will be.