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

sevenhills

Myrrdinthemage said:

They could, also, take action against profiteering, but won't do that either. . .  Either way, continuing to put up interest rates isn't going to bring down inflation soon.

We certainly don't have profiteering in the retail sector.

We have Asda, Morrisons, Sainsbury's, Waitrose, M+S, Home Bargains, B+M and in recent years we have Aldi and Lidl. Did I miss any, in what sector do you think that we have profiteering?

Energy could be one, no competition at all, at the moment.

valten

annabanana82 said:

It's been interesting talking to colleagues about this.

Colleague 1 - mid to late 50's late divorcee, had to take a long term mortgage to retirement age. About to come off a fixed rate mortgage of 2%, looking at 6% come October as they hadn't realised they could lock in a deal early. Electric also cqme off a fix so energy bill has doubled. Food bill has also increased significantly, despite this they will be able to manage, but not without a small change to current lifestyle - already lives quite cheaply.

Colleague 2 part of young couple, mortgage rate is under 2% also expires end of the year. They think low interest rates are normal and likely fall by the end of the year. They've bought a fitted kitchen on credit, had a fancy garden office on credit, have alluded to further debt. Their heads are seemingly buried in the sand, as they booked a £2k holiday on impulse and on the credit card. Their mortgage was taken out over 40 years, so limited to extend the term. Despite them both earning fully throughout covid they still took the mortgage holiday. 

Blimey, even reading about Colleague 2 has caused me to break out in a cold sweat. I've had some sleepness nights for the last week or so but reading that has given me a sense of perspective. I feel really sorry for them. They strike me as the sort of people likely to be amongst the 1st casualties.

We've got a rate of about 2% expiring in Jan next year and I'm meeting with my broker in a couple of weeks to see what we can lock in now. We actually spoke about 2 months ago and discussed what then seemed like likely scenarios for next jan. What was on offer then was obviously higher than what we where paying now but still perfectly manageable, sadly too early to lock anything in then and now it's going to be more.

We've currently only got a small personal loan and a single CC in terms of outstanding debt (less than 8k total) and outstanding mortgage is 245k with 25 years left and we've got a combined income of 80k and no dependencies. We both got on the ladder back in 2013 so we've only known low rates, but it was always at the back of my mind that low rates where a likely aberration and would go up in time but the speed at which it happened has taken us by shock.

So not great, not terrible. Slighly over 3x outcome outstanding, no significant other debts and as we don't have kids we've got slack, it'll be a noticeable squeeze in disposable income and we're delaying some planned home improvements for a few years. No plans to move, this is the 'forever' home so a drop in value in the short term isn't the end of the world as we don't plan to sell. But I don't see us in any danger of repossession or anything.

Sarah1Mitty2

TerryDuckworth said:

weddingringman said:

TerryDuckworth said:

steve866 said:

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.

Thanks for that Steve. Reading your post I will be very cautious when taking advice off anyone on here. 

People are just tired of generations of people that actively support and attempt to prop-up house prices that are wholly unaffordable for many people now.

I watched rates being slashed during the pandemic and surprise surprise - house prices rocketed. People borrowing record multiples at record lows, and at the same time having the audacity to only fix for 2 years because it’s £20 cheaper per month than a more secure 5 year fix. 

Now that the gambles not paid off, people are crying out for mortgage support which would cost the tax payer billions, continue to prop up house prices, and cause inflation in itself.

In 10 years time I want to help my kids buy a house so I’m afraid we need a house price correction. 

I have been having a good read over some of the posts on here and it seems if anyone mentions a house price correction or crash they get shot down. I am no economist but from what I have been seeing on the news recently it looks like we could be heading into a crisis. 

I was talking with a work colleague the other week and their 2-year fixed rate is up for renewal soon and they were saying that their payments could shoot up from £1,500 to £2,500 per month. The only way they could bring this payment down is to take a longer term mortgage or go interest only.

Yes, but all that means is that with the media trumpeting on about a crash 24/7 the poster just won`t be taken seriously and may end up on a few "Ignore" lists. Amazing isn`t it how quickly the media switched from "Housing Crisis" (result of too much cheap debt) to "Mortgage Crisis" (result of too much cheap debt) as if they were two separate things!?

Sarah1Mitty2

sevenhills said:

Myrrdinthemage said:

They could, also, take action against profiteering, but won't do that either. . .  Either way, continuing to put up interest rates isn't going to bring down inflation soon.

We certainly don't have profiteering in the retail sector.

We have Asda, Morrisons, Sainsbury's, Waitrose, M+S, Home Bargains, B+M and in recent years we have Aldi and Lidl. Did I miss any, in what sector do you think that we have profiteering?

Energy could be one, no competition at all, at the moment.

Housing and BTL were the main ones, thankfully that circus tent is being shut down as we type.

TerryDuckworth

Sarah1Mitty2 said:

TerryDuckworth said:

weddingringman said:

TerryDuckworth said:

steve866 said:

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.

Thanks for that Steve. Reading your post I will be very cautious when taking advice off anyone on here. 

People are just tired of generations of people that actively support and attempt to prop-up house prices that are wholly unaffordable for many people now.

I watched rates being slashed during the pandemic and surprise surprise - house prices rocketed. People borrowing record multiples at record lows, and at the same time having the audacity to only fix for 2 years because it’s £20 cheaper per month than a more secure 5 year fix. 

Now that the gambles not paid off, people are crying out for mortgage support which would cost the tax payer billions, continue to prop up house prices, and cause inflation in itself.

In 10 years time I want to help my kids buy a house so I’m afraid we need a house price correction. 

I have been having a good read over some of the posts on here and it seems if anyone mentions a house price correction or crash they get shot down. I am no economist but from what I have been seeing on the news recently it looks like we could be heading into a crisis. 

I was talking with a work colleague the other week and their 2-year fixed rate is up for renewal soon and they were saying that their payments could shoot up from £1,500 to £2,500 per month. The only way they could bring this payment down is to take a longer term mortgage or go interest only.

Yes, but all that means is that with the media trumpeting on about a crash 24/7 the poster just won`t be taken seriously and may end up on a few "Ignore" lists. Amazing isn`t it how quickly the media switched from "Housing Crisis" (result of too much cheap debt) to "Mortgage Crisis" (result of too much cheap debt) as if they were two separate things!?

I listen to LBC Radio a lot and over the last 2 weeks they have been a flood of callers who say they will struggle to pay these new rates as there mortgage rolls over. It is the same on GB News they haven't stopped talking about lately.

Judging by all these stories it doesn't sound to good for many people.

MattMattMattUK

TerryDuckworth said:

I have been having a good read over some of the posts on here and it seems if anyone mentions a house price correction or crash they get shot down. I am no economist but from what I have been seeing on the news recently it looks like we could be heading into a crisis. 

I was talking with a work colleague the other week and their 2-year fixed rate is up for renewal soon and they were saying that their payments could shoot up from £1,500 to £2,500 per month. The only way they could bring this payment down is to take a longer term mortgage or go interest only.

There have been a multiple "crashys" on here over the years, however the main reason is by "correction" they mean crash, and by crash they seem to be wishing that house prices will fall by 30-50% and that is just not going to happen, it shows a lack of understanding of even basic economics. House prices are a factor of supply and demand, increasing interest rates only reduces demand slightly (largely by children living with their parents longer), but immigration already significantly outstrips house building. House prices might fall slightly based on the edge cases of affordability, but they would not fall significantly unless their is either a significant increase in home building, or a substantial drop in population.

TerryDuckworth said:

I was talking with a work colleague the other week and their 2-year fixed rate is up for renewal soon and they were saying that their payments could shoot up from £1,500 to £2,500 per month. The only way they could bring this payment down is to take a longer term mortgage or go interest only.

I expect that they are either exaggerating, or misunderstanding. To generate those kind of changes they would need to have a large mortgage on an short term, going from a significantly below market average fix to a well above market average fix, ie going from somewhere like 0.75% to 9%. 

TerryDuckworth said:

Sarah1Mitty2 said:

TerryDuckworth said:

weddingringman said:

TerryDuckworth said:

steve866 said:

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.

Thanks for that Steve. Reading your post I will be very cautious when taking advice off anyone on here. 

People are just tired of generations of people that actively support and attempt to prop-up house prices that are wholly unaffordable for many people now.

I watched rates being slashed during the pandemic and surprise surprise - house prices rocketed. People borrowing record multiples at record lows, and at the same time having the audacity to only fix for 2 years because it’s £20 cheaper per month than a more secure 5 year fix. 

Now that the gambles not paid off, people are crying out for mortgage support which would cost the tax payer billions, continue to prop up house prices, and cause inflation in itself.

In 10 years time I want to help my kids buy a house so I’m afraid we need a house price correction. 

I have been having a good read over some of the posts on here and it seems if anyone mentions a house price correction or crash they get shot down. I am no economist but from what I have been seeing on the news recently it looks like we could be heading into a crisis. 

I was talking with a work colleague the other week and their 2-year fixed rate is up for renewal soon and they were saying that their payments could shoot up from £1,500 to £2,500 per month. The only way they could bring this payment down is to take a longer term mortgage or go interest only.

Yes, but all that means is that with the media trumpeting on about a crash 24/7 the poster just won`t be taken seriously and may end up on a few "Ignore" lists. Amazing isn`t it how quickly the media switched from "Housing Crisis" (result of too much cheap debt) to "Mortgage Crisis" (result of too much cheap debt) as if they were two separate things!?

I listen to LBC Radio a lot and over the last 2 weeks they have been a flood of callers who say they will struggle to pay these new rates as there mortgage rolls over. It is the same on GB News they haven't stopped talking about lately.

LBC and GB News are hardly reputable news organisations, the are sensationalist, effectively red-tops.

TerryDuckworth said:

Judging by all these stories it doesn't sound to good for many people.

Interest rates rising are not good for anyone with a mortgage, the only people they are good for are people with zero debts and large amounts of savings and not because of interest on their savings rising, but more because they will tackle inflation to a degree, so stopping the erosion of those savings.

The reality is though that the vast majority of people saying that they cannot afford the mortgage increases are not being honest, what they are saying is that they cannot maintain their current lifestyle with the increases in mortgage payments, which is an entirely different thing. Borrowers over the last 5-10 years have been subject to a stress test as part of affordability that accounted for interest rate rises up to 6-8% depending on when they borrowed. What people will have to do is cut back on non-essential expenditure, that might mean not buying new cars, not going on holiday, cutting back leisure expenditure, etc. and that is exactly what the increase is designed to do. The difficulty with that is that interest rates put nearly all of the pressure of that anti-inflationary cut in spending onto mortgage holders who are only 30% of the population, leaving the other 70% carrying none of the negative impact. 

Strummer22

MattMattMattUK said:

The reality is though that the vast majority of people saying that they cannot afford the mortgage increases are not being honest, what they are saying is that they cannot maintain their current lifestyle with the increases in mortgage payments, which is an entirely different thing. Borrowers over the last 5-10 years have been subject to a stress test as part of affordability that accounted for interest rate rises up to 6-8% depending on when they borrowed. What people will have to do is cut back on non-essential expenditure, that might mean not buying new cars, not going on holiday, cutting back leisure expenditure, etc. and that is exactly what the increase is designed to do. The difficulty with that is that interest rates put nearly all of the pressure of that anti-inflationary cut in spending onto mortgage holders who are only 30% of the population, leaving the other 70% carrying none of the negative impact. 

I agree, the main point isn't that people can't afford their mortgage, it's that they can't afford their mortgage and maintain their current lifestyle. 

These are the people who will bite the govt's hand off for any mortgage support available when they could, in fact, pay their mortgage by not having a second holiday and eating/drinking out less. I expect a few of you here have watched Eat Well for Less, well I'm envisioning the type of people who look surprised when Greg Wallace tells them they can save £4,000 a year just by not having the whole family eat a takeaway dinner twice a week.

As unpopular as the comments were when they were made, we do need to accept that as a nation we are poorer than we used to be. Many factors play into this, but government policy has definitely not helped. 

As for my situation, I'm on a variable mortgage, my unusual circumstances (see https://forums.moneysavingexpert.com/discussion/comment/80038246#Comment_80038246) meaning a fix is not an option. My wife and I plus two kids under 4 are not taking any expensive holidays, we aren't making any car payments, and basically already live cheaply with few luxuries. We did a budget this weekend which gave some comfort that we will still be in the black if our mortgage rate increases to 7%. The next few years are likely to be a challenge with interest rates and childcare costs high, and little or no help from income tax bands increasing. In terms of discretionary spending it will probably only delay some fairly major home improvement works, so I guess high mortgage rates will reduce demand from me there.

On the other hand, if we get through this, in a few years the kids will be in school (reduced childcare costs, more time for wife to earn money), mortgage costs come down a bit, hopefully my take-home pay goes up... I see a financially secure future for my family. Or there's a nuclear war and none of it matters anyway!  

RyanHello

It will be a good thing for interest rates going back to 5% - 6%. Rates have been low for far too long. 

MattMattMattUK

RyanHello said:

It will be a good thing for interest rates going back to 5% - 6%. Rates have been low for far too long. 

What makes you think it will be good?

RyanHello

MattMattMattUK said:

RyanHello said:

It will be a good thing for interest rates going back to 5% - 6%. Rates have been low for far too long. 

What makes you think it will be good?

Historically that is the average rate. Since 2008 - the zero rates have made people borrow too much. That's why house prices are so high. A lot people / families have just looked at the monthly cost on everything.