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

ReadySteadyPop

MeteredOut said:

ReadySteadyPop said:

MeteredOut said:

ReadySteadyPop said:

Maka344 said:

lojo1000 said:

Looking ahead to 2025 and beyond, there could be a negative scenario emerging and being 'sniffed-out' by the markets now.

Today showed weaker employment data for the UK. Whilst still strong, as borne out by hot wage inflation well above CPI, the employment market is weakening - jobs are becoming less secure. 

With budget deficits already long-term unsustainable (UK:-4.2% of GDP) with a strong employment market, there is a right to be concerned about what economic policy will need to be if inflation does not fall to target - and remain at target.

If business confidence falls and they begin to reduce supply/not invest, they will turn instead to trying to raise prices, employment will fall, budget deficits will expand and that puts pressure on bond yields to go higher - both long term and short term as central banks remain under pressure to contain inflation.

Poor relations with China and anti-competitive practices between all the major trading blocks will continue to emerge as countries try and retain whatever advantage they believe they have.

Stagflation may be coming back. Weak economies will lose control of their currencies unless they keep rates high enough to attract capital flows.

Great analysis, what could this mean for base rates and swap rates/mortgages?

They will go higher. This is a very bad time in history to have high debt levels.

This thinking is not flowing through to savings/ISAs, where most of the providers are in the process of closing products and replacing them with similar offerings with lower rates. This is including 1 and 2 year fixes.

That can change overnight, the key is not to have too much debt.

Did it change overnight?

It can, we can`t predict which night though, but the less debt you are burdened with the better for you when it does change.

Hoenir

ReadySteadyPop said:

Maka344 said:

Deutsche Bank's economists have retreated from their long-held May rate cut. "We now shift the starting date for rate cuts to June," they said, adding that they "still see the MPC delivering three quarter point rate cuts this year (June, Sep, Dec).

"But we now expect the MPC to deliver only four rate cuts next year (Feb, May, Aug, Nov), sticking to a quarterly pace through 2025 (previously, we saw six rate cuts in 2025). We expect two further rate cuts in H1-26 taking the terminal rate to 3%."

Might as well just make it up, they can`t predict where rates will be in the future.

No one can predict what might happen tomorrow, let alone next week or next month. Views as a consequence constantly change. Deutsche Bank's economists aren't commenting on the future direction of UK mortgage rates either. Though that's how these snippets from a comprehensive report morph into a totally different story of their own. 

coypondboy

sadly no sign of rate cuts this year as inflation picking sadly 1.5 million will be stuck on 5% but have had a good run of less than 2% over past 15 yrs

sunnyvintage

Hello experts!

I have a question amd thought would be good to have your opinion

Can there be a scenario where lenders mortgage rates are less than Bank of England base rate?. E.g lets say in 2 years BOE base rate falls to 3.5% from current 5.25%. Does that mean lenders rate to the borrowers will be more than 3.5% or there is no corelation ?

Regards

MattMattMattUK

sunnyvintage said:

Hello experts!

I have a question amd thought would be good to have your opinion

Can there be a scenario where lenders mortgage rates are less than Bank of England base rate?. E.g lets say in 2 years BOE base rate falls to 3.5% from current 5.25%. Does that mean lenders rate to the borrowers will be more than 3.5% or there is no corelation ?

Regards

Not an expert, an educated amateur at best. It could happen, there is no technical reason why a bank could not lend below base rate, but they would be losing money so they would be very unlikely to do so. 

BarelySentientAI

sunnyvintage said:

Hello experts!

I have a question amd thought would be good to have your opinion

Can there be a scenario where lenders mortgage rates are less than Bank of England base rate?. E.g lets say in 2 years BOE base rate falls to 3.5% from current 5.25%. Does that mean lenders rate to the borrowers will be more than 3.5% or there is no corelation ?

Regards

There is a correlation but the two rates are not equivalent.  AFAIK, swap rates are much more important.

Maka344

sunnyvintage said:

Hello experts!

I have a question amd thought would be good to have your opinion

Can there be a scenario where lenders mortgage rates are less than Bank of England base rate?. E.g lets say in 2 years BOE base rate falls to 3.5% from current 5.25%. Does that mean lenders rate to the borrowers will be more than 3.5% or there is no corelation ?

Regards

Yes, actually, it is happening now due to swap rates. The current base rate is 5.25%, you can get 4.47% with a decent (75%) LTV on a 2 year fix. However, swap rates are increasing and so are these deals, as a result. 

sunnyvintage

Thanks, let see what others think
The reason I am asking is : I have been following the rates since quite a long and have read a lot. Hope/expectations is that BOE rates may fall to 3 - 3.5% in the next 2 years and remain stable. And lenders rate will usually be higher than that..hence does it indicate that even after 2 years average lender rates will be sort of 3.5%  - 4%? ( provided BOE rate is in the range of 3% - 3.5%)

Newbie_John

The price of eggs went up. It will stay 5.25%.

lojo1000

sunnyvintage said:

Thanks, let see what others think
The reason I am asking is : I have been following the rates since quite a long and have read a lot. Hope/expectations is that BOE rates may fall to 3 - 3.5% in the next 2 years and remain stable. And lenders rate will usually be higher than that..hence does it indicate that even after 2 years average lender rates will be sort of 3.5%  - 4%? ( provided BOE rate is in the range of 3% - 3.5%)

I think you just have to accept there is a wide margin were rates might be in the future relative to BoE dependent on, and no doubt not an exhaustive list:

- unemployment levels and repossessions
- competition amongst banks for volume
- funding rates (money supply and expectation of forward base rate)
- regulatory costs and penalties for the last 25 years of irresponsible lending on the basis the money supply would always be expanding

You cannot infinitely expand the money supply and increase the gap between asset owners and workers because eventually workers rally behind a mad-person who has a death wish.