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

Hoenir

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

PixelPound

ReadySteadyPop said:

I`m doubtful that a Labour government can proceed very far without upsetting the bond markets to be honest, and the attacks on shipping lanes have ramped up recently, plus all the other geo-politics going on, meaning there is plenty more inflation to come.

Very much like Blair's first term, Labour will be limited by the spending cuts they've agreed to. Worse this time in that we were booming in 97, not now.

lojo1000

This election has been mostly ignored by markets due to Labour being seen as pretty much the same as the incumbents.

However, I do wonder whether a landslide may give the markets a concern that it may be taken by Labour as a mandate for change, despite canvassing on no change (regardless of their slogan of 'Change'!!).

If Labour get in and Starmer makes a speech about material spending increases that will be something to listen to. The country cannot afford the money needed to fix the NHS, etc so it can only be done by tax rises or debt. Either way, that is not positive for debt markets.

So watch out for a landslide (+200 seats) and a fiscally aggressive speech to raise yields a la Truss.

[I think Starmer, et al are too shrewd for this mistake however. They will give it a few months before making anything other than cosmetic changes]

lojo1000

I actually feed sad for the average UK voter. They suffer year after year with cost of living rises and worse public services and yet think they just have to accept what politics throws at them so they vote based on promises and personality. Then, they finally decide enough is enough and 'vote for change'!

Do people actually give a toss anymore? I remember the riots in 2011 and cannot imagine that happening again.

Are people too accepting, too busy scrolling their phones, don't think politicians are culpable or is actually life just great in the UK?

The older generation always think the younger generation are sleepwalking. We'll see in this election if the young actually do come out and vote, they usually are relatively small in number.

From my small world, the young are strong supporters of Reform?! That perhaps is due to Farage being the only one who speaks from his mind as opposed to the Party guidance notes.

ReadySteadyPop

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, markets are constantly re-pricing debt, in your scenario there wouldn`t have been a problem in 2008, there would be no concerns about how people vote in Europe and no worries about who becomes U.S president because one of them is "inflationary"! Mortgages are priced off the "Ten Year Yield", if that spikes suddenly no one wants to buy your house, or your next fix is way higher.

ReadySteadyPop

lojo1000 said:

This election has been mostly ignored by markets due to Labour being seen as pretty much the same as the incumbents.

However, I do wonder whether a landslide may give the markets a concern that it may be taken by Labour as a mandate for change, despite canvassing on no change (regardless of their slogan of 'Change'!!).

If Labour get in and Starmer makes a speech about material spending increases that will be something to listen to. The country cannot afford the money needed to fix the NHS, etc so it can only be done by tax rises or debt. Either way, that is not positive for debt markets.

So watch out for a landslide (+200 seats) and a fiscally aggressive speech to raise yields a la Truss.

[I think Starmer, et al are too shrewd for this mistake however. They will give it a few months before making anything other than cosmetic changes]

It doesn`t matter how many months they wait, the bond market will be straight onto any silly moves, like trying to prop up the housing market with daft borrowing schemes for example.

Hoenir

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

lojo1000

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

This will not be a problem unless unemployment rises/ recession occurs. Terms can be extended as banks are trying to avoid a tsunami of credit defaults. For now, this is all under control.

Whilst these repayment deferrals ease near term pain it does create a weaker monetary demand in the future as what would have been mortgage-free homeowners will need to continue to pay down the debt for many more years.

I'm interested now to watch if Labour put resolving public pay disputes (i.e agreeing to pay rises) ahead of keeping a tighter fiscal deficit.......

.....if markets sniff looser fiscal policy then yields rise and BoE will see less room to cut.

Hoenir

lojo1000 said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

This will not be a problem unless unemployment rises/ recession occurs. Terms can be extended as banks are trying to avoid a tsunami of credit defaults. For now, this is all under control.

My comment is with reference to the mechanics. That £200 bn of funding has to be sourced from somewhere, i.e. savers deposits, Retail Backed Mortgage Securities etc.  Why is an Asian investor going to lend money at say 3% for 5 years when risk free US Treasuries offer a return of around 4.5% currently.  Even UK Gilts offer 4%+ returns. 

lojo1000

Hoenir said:

lojo1000 said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

This will not be a problem unless unemployment rises/ recession occurs. Terms can be extended as banks are trying to avoid a tsunami of credit defaults. For now, this is all under control.

My comment is with reference to the mechanics. That £200 bn of funding has to be sourced from somewhere, i.e. savers deposits, Retail Backed Mortgage Securities etc.  Why is an Asian investor going to lend money at say 3% for 5 years when risk free US Treasuries offer a return of around 4.5% currently.  Even UK Gilts offer 4%+ returns. 

The re-mortgage will set at the market rate which is, in most cases higher than the existing rate. I'm not sure what you think the issue is, if indeed you see one?