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

C225

michaels said:

It would spike now - I can't renew my mortgage until 5th June when no doubt fixes will be up 50+ basis points from where they were just last week

Feel you're pain, i can't renew until Tuesday but looking at the swap rates the rates will most likely have gone up by even then...

michaels

C225 said:

michaels said:

It would spike now - I can't renew my mortgage until 5th June when no doubt fixes will be up 50+ basis points from where they were just last week

Feel you're pain, i can't renew until Tuesday but looking at the swap rates the rates will most likely have gone up by even then...

I thought I couldn't renew until 4 months before my current product end date but it is letting me do so now about a week earlier but I will keep my current lower rate until in ends.  I am offered 4.04% for 5 year fix and 4.49% for 2 year.  They have also changed their ERC policy so it is now stepped at 1% per year of fix remaining, before it was 5%/2% for the whole term.  THis actually makes choosing between a 5 year and a 2 year more difficult.  Interestingly these rates are below the best saving fixed rates (5.15% 2 years, 5% 5 years) so there is arbitrage to be done here.

Apparently if I commit to a remortgage I can move to a different one of their remortgage deals any time before the new deal takes effect in October so in the unlikely event that rates fall or I change my mind re 2/5 years I can select a different product.

Am therefore very tempted to choose one now, it does tie me into the same provider but this has advantages on underwriting checks but also locks in today's rate.  Thoughts?

steve866

What are brokers seeing for rates on offer over the last 12 months? I’m fixed for the last 4 years but I’ve taken the odd look at rates for a 5 year fix they’ve been broadly unchanged despite all the rate hikes. 

gih

C225 said:

michaels said:

It would spike now - I can't renew my mortgage until 5th June when no doubt fixes will be up 50+ basis points from where they were just last week

Feel you're pain, i can't renew until Tuesday but looking at the swap rates the rates will most likely have gone up by even then...

I fear you're probably right, Nationwide have upped their fixed rates by around 0.4% this evening.

Sarah1Mitty2

[Deleted User] said:

They say 5.5% by the end of the year on the news. I thought 6% was the maximum stress testing. Getting a bit risky. Lots of people are going to be in trouble if rates remain this high.

I don`t believe "stress testing" has much value, it just assumes that the financial situation of the person trying to take out a mortgage debt will stay the same or get better way into the future, the best way to "stress test" is just to limit lending, I suppose rising interest rates are doing that anyway? I could easily see base rate at 6% in the near future though.

lojo1000

https://www.telegraph.co.uk/politics/2023/05/27/rishi-sunak-asks-stores-to-cap-basic-food-prices/

"Rishi Sunak will ask stores to cap basic food prices"

The issue is too much money chasing too few goods. If true, instead of finding ways to increase supply, Sunak's response is to cap food prices to help meet his inflation target.

Capping prices below market price will reduce supply.

Why not reduce VAT on 'essential' foods for a period until the wholesalers' (higher) fixed price contracts have ended?

We know families have cut spending on food due to price rises. This would reduce the price to the consumer, increase price to the wholesaler and help meet inflation targets. 

It also has a tendency to increase both demand and supply and hence offset the negative impact on VAT revenue.

MattMattMattUK

lojo1000 said:

https://www.telegraph.co.uk/politics/2023/05/27/rishi-sunak-asks-stores-to-cap-basic-food-prices/

"Rishi Sunak will ask stores to cap basic food prices"

The issue is too much money chasing too few goods. If true, instead of finding ways to increase supply, Sunak's response is to cap food prices to help meet his inflation target.

Capping prices below market price will reduce supply.

Why not reduce VAT on 'essential' foods for a period until the wholesalers' (higher) fixed price contracts have ended?

We know families have cut spending on food due to price rises. This would reduce the price to the consumer, increase price to the wholesaler and help meet inflation targets. 

It also has a tendency to increase both demand and supply and hence offset the negative impact on VAT revenue.

There is no VAT on essential foods, they cannot reduce something which is already at zero.

michaels

lojo1000 said:

https://www.telegraph.co.uk/politics/2023/05/27/rishi-sunak-asks-stores-to-cap-basic-food-prices/

"Rishi Sunak will ask stores to cap basic food prices"

The issue is too much money chasing too few goods. If true, instead of finding ways to increase supply, Sunak's response is to cap food prices to help meet his inflation target.

Capping prices below market price will reduce supply.

Why not reduce VAT on 'essential' foods for a period until the wholesalers' (higher) fixed price contracts have ended?

We know families have cut spending on food due to price rises. This would reduce the price to the consumer, increase price to the wholesaler and help meet inflation targets. 

It also has a tendency to increase both demand and supply and hence offset the negative impact on VAT revenue.

I think this is a bit of a sneaky one.  When the gov gave people money towards their utility bills it did not impact inflation as this is based on the unit price not the net cost whereas when they then applied the EPG price cap this did keep inflation lower.

So if they come to an agreement with the supermarkets to reduce the price of items that just happen to be in the inflation basket with perhaps a nod and a wink that they can make this up by increasing other prices on items not in the basket then we see 'recorded' inflation fall - supermarket are happy they can claim to be supporting the least well of fwhilst govt spends nothign but gets (recorded) food price inflation down.

ItisHappening

Sarah1Mitty2 said:

[Deleted User] said:

They say 5.5% by the end of the year on the news. I thought 6% was the maximum stress testing. Getting a bit risky. Lots of people are going to be in trouble if rates remain this high.

I don`t believe "stress testing" has much value, it just assumes that the financial situation of the person trying to take out a mortgage debt will stay the same or get better way into the future, the best way to "stress test" is just to limit lending, I suppose rising interest rates are doing that anyway? I could easily see base rate at 6% in the near future though.

Base rate may end up at 8% next year as inflation is proving to be very sticky. Looks like a recession is on the horizon, it certainly feels like we are already in one.

IAMIAM

So BOE rates are predicted to be 5.5% and some by year end/early 2024. 
Whether you rent or have a mortgage you are screwed. They both are on a parr at the moment.