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

steve866

tony863 said:

Prior to reading the last few pages of this thread I convinced myself a tracker mortgage might be worth the punt being around half a percent lower than fixed. My finger in the air feeling was that the rate would peak around 5-5.5% and then fall steadily back down to 2 or 3%.

Having now read some of the recent comments am I right in guessing the higher rates are here to stay? I appreciate it's a crystal ball moment, but maybe the better question is - would anyone opt for a 2yr tracker mortgage right now? 

I would be careful taking advice from this thread, some people have agendas! Personally if I wanted a 2 year deal I’d fix because I wouldn’t expect rates to come down drastically within 2 years so wouldn’t lose out on much. I’d be considering whether I’d need to fix for longer if rates could keep increasing. Depends on fees / early repayment charges / other factors of course.

MattMattMattUK

sevenhills said:

lmitchell said:

Scrap VAT on energy. Enforce lower standing charges. Reduce fuel duty.

Those three solutions alone would get us back down fast - and without rates having to go much higher than 3%.

If they do things in the correct order, reverse the 0.5% interest rate hike, increase VAT by 1% to pay off the Governments debt, once that debt is paid off it will save £90 billion per year in debt payments, which would then allow the Government to reduce VAT to 5% on everything.

Although my preference would be to reduce taxes on earnings.

Increasing VAT to 21% would raise around another £16 billion per year, ignoring interest it would take 162 years to clear the debt. Accounting for interest, the national debt would reach 200% of GDP within 40 years.  
Reducing VAT to 5% would cost the exchequer around £140 billion per annum, meaning the national debt would reach 200% of GDP within 16 years.

The UK already has the lowest taxes in the EU apart from Ireland and Luxembourg, both of which are tax havens. It has the lowest level of income taxation in the G20 apart from the USA which is a borderline bankrupt low tax economy with far lower costs per head due to lacking social support.

The idea of tax cuts to improve the current position is economically illiterate, as equally illiterate as the idea that a £16 billion pa tax rise can clear a £2.6 trillion debt when the deficit is running at over £230 billion pa.

michaels

tony863 said:

Prior to reading the last few pages of this thread I convinced myself a tracker mortgage might be worth the punt being around half a percent lower than fixed. My finger in the air feeling was that the rate would peak around 5-5.5% and then fall steadily back down to 2 or 3%.

Having now read some of the recent comments am I right in guessing the higher rates are here to stay? I appreciate it's a crystal ball moment, but maybe the better question is - would anyone opt for a 2yr tracker mortgage right now? 

I went for a 2 year fix 3 weeks ago, they are now 50bps more expensive.  However in that time 5 year fixes are up by 75 basis points - ie the markets think rates are not only higher but also for longer.  I am now thinking perhaps the 5 year fix would have been the winner.

sevenhills

MattMattMattUK said:

Reducing VAT to 5% would cost the exchequer around £140 billion per annum, meaning the national debt would reach 200% of GDP within 16 years.

The idea of tax cuts to improve the current position is economically illiterate, as equally illiterate as the idea that a £16 billion pa tax rise can clear a £2.6 trillion debt when the deficit is running at over £230 billion pa.

Who is suggesting tax cuts "to improve the current position"?

An increase in VAT to help pay down government debt would have the same effect as increasing interest rates, but it would affect more people than just mortgage holders that are not on a fixed deal.

Increasing VAT would squeeze people's spending, I am sure you could adjust the numbers to make them work?

[Deleted User]

Sarah1Mitty2 said:

[Deleted User] said:

FTBs completely shafted. No help at all.

Interest rate rises are the only help they need really?

Not unless prices come down to 1980s levels, say a 60% reduction.

Sarah1Mitty2

[Deleted User] said:

Sarah1Mitty2 said:

[Deleted User] said:

FTBs completely shafted. No help at all.

Interest rate rises are the only help they need really?

Not unless prices come down to 1980s levels, say a 60% reduction.

The less debt they start with the better off they will be long term, but with global events taking a very serious turn I wouldn`t rule anything out on the volatility/interest rate front just now.

Sarah1Mitty2

tony863 said:

Prior to reading the last few pages of this thread I convinced myself a tracker mortgage might be worth the punt being around half a percent lower than fixed. My finger in the air feeling was that the rate would peak around 5-5.5% and then fall steadily back down to 2 or 3%.

Having now read some of the recent comments am I right in guessing the higher rates are here to stay? I appreciate it's a crystal ball moment, but maybe the better question is - would anyone opt for a 2yr tracker mortgage right now? 

IMO you shouldn`t bet on 2 or 3% coming back, for a variety of economic and geopolitical reasons those days are now gone. As someone pointed out earlier, the historical average base rate is around 7%.

snowqueen555

I think rates are holding, does anyone expect them to actually increase next week or were the rises we saw this month pricing this in?

jonnydeppiwish!

Stupid questions time - having read this whole thread twice, I still have very little clue!

Has the interest rates rise has any effect on inflation yet or will it take longer/higher rates to get the desired effect?

Have the banks mortgage stress test not been fit for purpose with mortgagees saying they’ll have to seek or is that down to multiple combinations of reasons?

With rate rises, what’s the chances of more businesses going busy and this more unemployed (especially in the services sector)? We now have 8 or 9 cafes open in our small town and I do wonder if they are all still viable!

Listening to the radio as few days ago and they seemed to think it hasn’t but will do as there’s around 1.2m coming off low fixed rates over the next 6 months.

Sarah1Mitty2

jonnydeppiwish! said:

Stupid questions time - having read this whole thread twice, I still have very little clue!

Has the interest rates rise has any effect on inflation yet or will it take longer/higher rates to get the desired effect?

Have the banks mortgage stress test not been fit for purpose with mortgagees saying they’ll have to seek or is that down to multiple combinations of reasons?

With rate rises, what’s the chances of more businesses going busy and this more unemployed (especially in the services sector)? We now have 8 or 9 cafes open in our small town and I do wonder if they are all still viable!

Listening to the radio as few days ago and they seemed to think it hasn’t but will do as there’s around 1.2m coming off low fixed rates over the next 6 months.

1) No, it is far too early, and the economy doesn`t respond to rate hikes as quickly as it used to, people have far too much access to credit now for one thing, previously a company seeing it`s debt costs rise would do a wage freeze and people would quickly see the effect in their wage packet. It will take higher for longer and much higher rates to have an effect.

2) "Stress Test" is just another soundbite, it can`t take account of future changes like job loss, kids being born, divorce etc. etc. Most people I have talked with recently who took out mortgage debt could barely make the payments at the low fixes they got let alone at 7,8,9% base rate. Some cases were paying more than their rent but just wanted to be "on the ladder".

3) Yes, people coming off a fix (in many cases) will be immediately forced to tighten their spending to pay the mortgage debt, that means businesses like your 8 or 9 cafes get hit almost immediately.