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

fergie_

BarelySentientAI said:

ReadySteadyPop said:

Altior said:

Obviously if saving rates are significantly higher than inflation, it sucks money out of the economy. It's the opposite to slashing rates to encourage spending. I'm sure lots of people here have been shifting to 'risk free' options, which are only more appealing if the value of your cash in real terms is not being eroded away. 

As I've always stated on this topic however, what we do will be ultimately determined by the Fed. There's theory, and there's the real world. 

Exactly, and it looks like mortgage rates are on the move up again.

Not according to any news source apart from you.

The most recent rate changes have almost all been cuts.

The mortgage market lags slightly behind the swap markets. Swaps had been coming down - hence some small cuts - and are now creeping back up.

sevenhills

fergie_ said:

The mortgage market lags slightly behind the swap markets. Swaps had been coming down - hence some small cuts - and are now creeping back up.

But what should the interest rates be, to benefit the whole economy? Savers need a little interest and businesses need lowish rates.

fergie_

sevenhills said:

fergie_ said:

The mortgage market lags slightly behind the swap markets. Swaps had been coming down - hence some small cuts - and are now creeping back up.

But what should the interest rates be, to benefit the whole economy? Savers need a little interest and businesses need lowish rates.

Its not as straightforward as this, but say rates are 2% and you need to borrow to buy something costing 400k, but at 4% the same item would have cost 200k.

The interest cost is the same, but who is better off?

ReadySteadyPop

sevenhills said:

fergie_ said:

The mortgage market lags slightly behind the swap markets. Swaps had been coming down - hence some small cuts - and are now creeping back up.

But what should the interest rates be, to benefit the whole economy? Savers need a little interest and businesses need lowish rates.

7% base rate is the historical average I believe?

BarelySentientAI

ReadySteadyPop said:

sevenhills said:

fergie_ said:

The mortgage market lags slightly behind the swap markets. Swaps had been coming down - hence some small cuts - and are now creeping back up.

But what should the interest rates be, to benefit the whole economy? Savers need a little interest and businesses need lowish rates.

7% base rate is the historical average I believe?

Pick whatever data you want to get whatever result you want.  You could get anywhere from 2% to 15% as the "historical average".

sevenhills

ReadySteadyPop said:

7% base rate is the historical average I believe?

I think the rates that we have now are roundabout the correct rate for the whole economy. lojo1000 has a good point, but I am sure Rachel Reeves will know more than the both of us.

ReadySteadyPop

BarelySentientAI said:

ReadySteadyPop said:

sevenhills said:

fergie_ said:

The mortgage market lags slightly behind the swap markets. Swaps had been coming down - hence some small cuts - and are now creeping back up.

But what should the interest rates be, to benefit the whole economy? Savers need a little interest and businesses need lowish rates.

7% base rate is the historical average I believe?

Pick whatever data you want to get whatever result you want.  You could get anywhere from 2% to 15% as the "historical average".

Can you show me how you get 15% as the average?

BarelySentientAI

ReadySteadyPop said:

BarelySentientAI said:

ReadySteadyPop said:

sevenhills said:

fergie_ said:

The mortgage market lags slightly behind the swap markets. Swaps had been coming down - hence some small cuts - and are now creeping back up.

But what should the interest rates be, to benefit the whole economy? Savers need a little interest and businesses need lowish rates.

7% base rate is the historical average I believe?

Pick whatever data you want to get whatever result you want.  You could get anywhere from 2% to 15% as the "historical average".

Can you show me how you get 15% as the average?

By defining "historical" to be 1979 - 1982.  That is a period in history, so it is a historical average.  Not a good one, but then any selected period is arbitrary. 

There is no such thing as "the historical average".

ReadySteadyPop

BarelySentientAI said:

ReadySteadyPop said:

BarelySentientAI said:

ReadySteadyPop said:

sevenhills said:

fergie_ said:

The mortgage market lags slightly behind the swap markets. Swaps had been coming down - hence some small cuts - and are now creeping back up.

But what should the interest rates be, to benefit the whole economy? Savers need a little interest and businesses need lowish rates.

7% base rate is the historical average I believe?

Pick whatever data you want to get whatever result you want.  You could get anywhere from 2% to 15% as the "historical average".

Can you show me how you get 15% as the average?

By defining "historical" to be 1979 - 1982.  That is a period in history, so it is a historical average.  Not a good one, but then any selected period is arbitrary. 

There is no such thing as "the historical average".

Economists tend to use meaningful chunks of time, 25 years for example, because that is the term of an average mortgage (well used to be) or even longer, I think the 7% figure is a 300 year average maybe, that would be classed as "historical" surely? You seem to be trying to say that interest rates don`t matter much when it is obvious they do matter a great deal to a great number of people, what happens if the four or five years of 15% happens right after your fix on a big mortgage taken at a much lower rate ends?

BarelySentientAI

ReadySteadyPop said:

BarelySentientAI said:

ReadySteadyPop said:

BarelySentientAI said:

ReadySteadyPop said:

sevenhills said:

fergie_ said:

The mortgage market lags slightly behind the swap markets. Swaps had been coming down - hence some small cuts - and are now creeping back up.

But what should the interest rates be, to benefit the whole economy? Savers need a little interest and businesses need lowish rates.

7% base rate is the historical average I believe?

Pick whatever data you want to get whatever result you want.  You could get anywhere from 2% to 15% as the "historical average".

Can you show me how you get 15% as the average?

By defining "historical" to be 1979 - 1982.  That is a period in history, so it is a historical average.  Not a good one, but then any selected period is arbitrary. 

There is no such thing as "the historical average".

Economists tend to use meaningful chunks of time, 25 years for example, because that is the term of an average mortgage (well used to be) or even longer, I think the 7% figure is a 300 year average maybe, that would be classed as "historical" surely? You seem to be trying to say that interest rates don`t matter much when it is obvious they do matter a great deal to a great number of people, what happens if the four or five years of 15% happens right after your fix on a big mortgage taken at a much lower rate ends?

They don't directly matter that much to any individual, and any selected trend or average is even less useful.

Planning on timing the market, either in terms of interest rate or value, is a fool's errand.