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

Strummer22

Sarah1Mitty2 said:

Strummer22 said:

lojo1000 said:

Now, with inflation uncertain, unemployment may begin rising to prior levels seen in the 80s and 90s - see below.

Do you think it will, and if so, why? 

AI might eventually have an impact, but more immediately less private credit is going to "start-up" type companies, less bank credit is going to companies who employ people and if your mortgage has gone from 700 pm to 1400pm like the guy on SKY news the other night, the first thing you will do is cut spending on take-aways, nights out etc. leading to less demand for workers in those sectors that people can easily do without to pay more towards their debt.

Well Jeremy Hunt did say that if a recession is necessary to get inflation under control, he'd take it. However, this would not be a 1980's Thatcherite disembowelling of industry. Levels of unemployment that high seem a very remote possibility (for now).

Aberdeenangarse

I see bond rates have hit 4.55% this morning. Unfortunately I can see mortgage rates climbing above 6% in the near future.

lojo1000

Debt finance is more expensive now than in 2022 - across the developed world.

Slowly both mortgage holders and businesses and indeed consumers who regularly borrow to finance their lifestyles have needed to refinance at higher rates - this is ongoing as fixed rate contracts expire. That has to impact demand and it has - look at M2 now declining as demand for debt declines.

Confidence ebbs slowly but it builds on itself. Just as it does on the way up.

Central banks do not have the ability to cut rates unlike they had since 2000. Therefore confidence will continue to wane.

The solution is prices adjusting downwards; something which they have not been allowed to do for 25 years. That's for property, commodities and financial assets.

The worst next event for the economy is businesses reducing supply as they foresee a recession coming. Unfortunately, many businesses have recent experience (covid) of curtailing their supply and raising prices to cope with a sudden demand shock. 

Sometimes events just transpire to create the worse outcome.

But no-one can say we haven't had it good for the last 25 years. Just explaining why we did it to our children will be tough.

Newbie_John

Aberdeenangarse said:

I see bond rates have hit 4.55% this morning. Unfortunately I can see mortgage rates climbing above 6% in the near future.

Just seen Barclays offering lowest 2 year mortgage at 5.28% now.. glad I've read this forum and locked to 4.4% two weeks ago.. though I was initially unhappy as I missed on 4.1% by days.. now I'm actually relieved 😌

Aberdeenangarse

Newbie_John said:

Aberdeenangarse said:

I see bond rates have hit 4.55% this morning. Unfortunately I can see mortgage rates climbing above 6% in the near future.

Just seen Barclays offering lowest 2 year mortgage at 5.28% now.. glad I've read this forum and locked to 4.4% two weeks ago.. though I was initially unhappy as I missed on 4.1% by days.. now I'm actually relieved 😌

Well done. HSBC have just withdrawn all their mortgages, relaunching Monday. It’ll be interesting to see what the new rates will be.

michaels

Newbie_John said:

Aberdeenangarse said:

I see bond rates have hit 4.55% this morning. Unfortunately I can see mortgage rates climbing above 6% in the near future.

Just seen Barclays offering lowest 2 year mortgage at 5.28% now.. glad I've read this forum and locked to 4.4% two weeks ago.. though I was initially unhappy as I missed on 4.1% by days.. now I'm actually relieved 😌

I got 'lucky' too - didn't think I would be able to book a rate with my lender until today based on their 'rules' but tried it the day after the inflation numbers came out and got 4.48, current rate is 4.73 but that is looking out of line with the market so will no doubt be disappearing imminently. 'Saved' £1500 per year over 2 years but now wondering if I should have gone for the 5 year 4.08 rate!

Aberdeenangarse

I usually take ‘forecasts’ with a pinch of salt, but think this one’s probably bang on the money. BoE should raise rates by 0.5% at their next meeting to show they’re serious about tackling inflation. They won’t so it’ll last longer.

The Bank of England will not cut interest rates until 2025, according new forecasts from Oxford Economics, which said policymakers were likely to “err on the side of caution”. 

Andrew Goodwin, chief UK economist at Oxford Economics, said he had previously expected the Bank to start cutting rates from May next year, but now believed this would be delayed until the following year. 

“The Monetary Policy Committee (MPC) has a relatively pessimistic view of potential supply and is particularly wary of the inflationary implications of a tight labour market.”

Whilst Oxford Economics is forecasting a “modest rise in unemployment over the next year”, the group said it was “unlikely that we will see much spare capacity emerge”. 

“The stickiness of core pressures means we see headline inflation remaining above the 2pc target until early-2025. And the persistent inflation overshoots of the past couple of years will still be fresh in the memory, not only for policymakers but also financial markets. 

“Against this backdrop, we think the MPC will err on the side of caution, waiting until it has strong evidence that price pressures are back under control before it considers loosening policy.”

It comes amid expectations that the Bank will raise interest rates for the 13th consecutive time later this month, as it battles with stubbornly high inflation. Interest rates are currently at their highest level in almost 15 years. 

[Deleted User]

If they were serious it would be a 1% raise. Typical of the modern world, nobody wants to make the omelette. 

PixelPound

Newbie_John said:

Aberdeenangarse said:

I see bond rates have hit 4.55% this morning. Unfortunately I can see mortgage rates climbing above 6% in the near future.

Just seen Barclays offering lowest 2 year mortgage at 5.28% now.. glad I've read this forum and locked to 4.4% two weeks ago.. though I was initially unhappy as I missed on 4.1% by days.. now I'm actually relieved 😌

The rates were 4.04% when I could lock a rate in but didn't do it for a couple of weeks and when I went through it, they'd changed the rate to 4.14% ahead of the MPC. I locked in anyway, and glad because waiting in the hope that it might go down a little before the deadline looks like it isn't going to happen.

Lots seem to see this interest rate as a "spike" that will eventually return to sub 2%. Surely it's more normalisation after a decade plus of artificially low rates. Maybe the MPC's slow piecemeal rate rises is part of it? Though not sure a big sudden increase would have the desired effect of it going up after and might cause some economical shock as a consequence.

[Deleted User]

What's the drama, checking HSBC nothing radical unless it hasn't been updated yet.