Drop in interest rates in 3-5 years

Strummer22

@dunstonh surely for near 7% to be normal that would have to be coupled with robust economic growth? As I understand it the BoE is unlikely to be able to keep rates even as high as they are now for very long for fear of disrupting what little economic growth the UK is able to achieve. I don't see that happening any time in the next decade (or more)

Nailer99

Answer: no-one knows. The banks, who employ people (on high salaries!) to make these predictions all think the interest rates will fall, otherwise 5-year rates would not be lower than 2-year.

It's a gamble. Are you feeling lucky? 

mi-key

I definitely don't think we are going to see lending rates drop down to 1 - 2% like we have had. More likely is around 3 - 3.5% for the next few years depending on what LTV and deal you can get etc.. Barring anything disasterous then inflation and bank base rates are going to come down from what they are now over the next couple of years. 

I think if you do go for the security of a 5 year fixed rate, you aren't going to end up overpaying much, if anything over the next few years, and at least you are protected against any increases. I think anything that makes less than £100pm difference on your payments isnt really worth worrying too much about

Dandytf

JM68 said:

Worth bearing in mind the very low interest rates after 2008 were supposed to be an 'emergency response' to the Great Financial Crisis, but then stayed with us for may years after that.

Some people may have an 'expectation' that they will be lower again once inflation is lower but the financial markets seem to be pricing these interest rate rises (which also happening in the US and EU) as more of a 'return to the norm', with some further rates rises by summer priced in.

Nobody has a crystal ball and fixing (and for how long) is always a bit of a gamble, and often varies according to personal circumstances.

Both the 3-year and 5-year rates you have quoted are very good by historic standards.

I don't discount idea that uk rates could return to near 5% 3-5 years from now is a while yet, post gfc.

coypondboy

Incoming labour govt may cause a run on the pound if the spending taps are opened and BREXIT/N Ireland results in a trade war.  This will make it hard to reduce rates so expect fixed rates to be higher during a labour govt especially if markets get spooked as they did under truss/Kwarteng so go for the 5 yr for piece of mind