Annuity rates on the up, is now a time to buy one?

RogerPensionGuy

The link below from today is suggesting Bank of England rate will get to 6.25% 

My guess is 6% or  jist maybe 6.25% will be the current peak this cycle and 6.5% is very unlikely(famous last words)

To this end I'm trying to wonder when annuity rates will max out this cycle?

Any views or comments welcome please.
☆☆☆

https://www.cityam.com/uk-inflation-to-fall-to-lowest-level-since-march-2022-but-bank-of-england-still-tipped-to-hike-interest-rates/

coastline

Although the article is dated 2022 there appears to be a link with the 15 year gilt which is suggested on many websites.

Annuity update July 2022 | William Burrows

Apart from financial news there's feeds which give daily moves.

United Kingdom Government Bond 10Y - 2023 Data - 1980-2022 Historical - 2024 Forecast (tradingeconomics.com)

Latest bond rates, interest rates, Libor and interbank rates - FT.com

EURIBOR, SONIA, and Gilt Rates | Chatham Financial

detailed website.

Retirement Line® Official Site | UK's Largest Annuity Broker | Retirement Line

FIREDreamer

RogerPensionGuy said:

The link below from today is suggesting Bank of England rate will get to 6.25% 

My guess is 6% or  jist maybe 6.25% will be the current peak this cycle and 6.5% is very unlikely(famous last words)

To this end I'm trying to wonder when annuity rates will max out this cycle?

Any views or comments welcome please.
☆☆☆

https://www.cityam.com/uk-inflation-to-fall-to-lowest-level-since-march-2022-but-bank-of-england-still-tipped-to-hike-interest-rates/

Peak of 6.5% in 2024. Also FTSE100 down below 7,000 then too.

RogerPensionGuy

FIREDreamer said:

RogerPensionGuy said:

The link below from today is suggesting Bank of England rate will get to 6.25% 

My guess is 6% or  jist maybe 6.25% will be the current peak this cycle and 6.5% is very unlikely(famous last words)

To this end I'm trying to wonder when annuity rates will max out this cycle?

Any views or comments welcome please.
☆☆☆

https://www.cityam.com/uk-inflation-to-fall-to-lowest-level-since-march-2022-but-bank-of-england-still-tipped-to-hike-interest-rates/

Peak of 6.5% in 2024. Also FTSE100 down below 7,000 then too.

Good post thanks. 

BoE rate of 6.5% early 2024 is surprising to many.

Just about everything I read is saying the UK is in an awkward spot when compared to other similar economies, the mood music is all consistent with that 6.5% in early 2024 and possibly very slow to retreat to avoid a most horrible bounce with inflation. 

I guess so much super cheap money for too long and all that QE has got us in this position, it also appears Brexit has just added to our headwinds. 

With all the above in mind I'm guessing when BoE rate is 5.75% or possibly 6% could be the best time to secure an annuity, any views most welcome?

coastline

There's a few things that stand out in those forecasts above. The estimate for the 10yr bond is 4.45% today and 5.15% next year. 15% up ? The base rate forecast 5% to 6.5% or 30% up ? They've got inflation falling to 2.7% in six months time. Optimistic ? Food inflation is stuck around 14% . Still the idea is to get rates above inflation and from what I've read a few percentage points above on average.
The US rates are above as of today. The UK has a distance to go but the above forecasts reckon pretty soon ?

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All depends on inflation for the annuity window and is it tamed ? See the 15yr (annuity rate guide) is now lower in a week.

Latest bond rates, interest rates, Libor and interbank rates - FT.com

Those grey shade areas are recessions and the flat spots are the so called "pivots" . The markets will be anticipating any such moves and bonds will react. Nobody knows how it will play out but cuts aren't a good thing. 

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dunstonh

BoE rate of 6.5% early 2024 is surprising to many.

Historically, interest rates have had to rise above the core inflation rate.  That is currently 7.1%.   So, you cannot rule that out.    However, there is hope that some of the Government's contractionary fiscal policy (at least regarding tax) will have some effect. However, public sector pay and benefit levels are a concern.

 Just about everything I read is saying the UK is in an awkward spot when compared to other similar economies, the mood music is all consistent with that 6.5% in early 2024 and possibly very slow to retreat to avoid a most horrible bounce with inflation. 

You must be very careful when you see the UK compared to others.    The UK was the first to industrialise and the first to deindustrialise.  It has one of the highest service sector ratios in the world.     Often you see comparisons with countries of a similar size or developed status.   However, a better comparison would be against countries with a similar service sector ratio and similar major industries.    Plus, different countries report their figures differently and are influenced by external events differently.  So, there is always a way to make the statistics appear better or worse depending on your view.

michaels

RogerPensionGuy said:

FIREDreamer said:

RogerPensionGuy said:

The link below from today is suggesting Bank of England rate will get to 6.25% 

My guess is 6% or  jist maybe 6.25% will be the current peak this cycle and 6.5% is very unlikely(famous last words)

To this end I'm trying to wonder when annuity rates will max out this cycle?

Any views or comments welcome please.
☆☆☆

https://www.cityam.com/uk-inflation-to-fall-to-lowest-level-since-march-2022-but-bank-of-england-still-tipped-to-hike-interest-rates/

Peak of 6.5% in 2024. Also FTSE100 down below 7,000 then too.

Good post thanks. 

BoE rate of 6.5% early 2024 is surprising to many.

Just about everything I read is saying the UK is in an awkward spot when compared to other similar economies, the mood music is all consistent with that 6.5% in early 2024 and possibly very slow to retreat to avoid a most horrible bounce with inflation. 

I guess so much super cheap money for too long and all that QE has got us in this position, it also appears Brexit has just added to our headwinds. 

With all the above in mind I'm guessing when BoE rate is 5.75% or possibly 6% could be the best time to secure an annuity, any views most welcome?

If the markets really expect rates to hit 6.5% then why would 1 and 2 year gilts only be at 5.25% and 5.15% respectively, there is an obvious arbitrage opportunity.

coastline

michaels said:

RogerPensionGuy said:

FIREDreamer said:

RogerPensionGuy said:

The link below from today is suggesting Bank of England rate will get to 6.25% 

My guess is 6% or  jist maybe 6.25% will be the current peak this cycle and 6.5% is very unlikely(famous last words)

To this end I'm trying to wonder when annuity rates will max out this cycle?

Any views or comments welcome please.
☆☆☆

https://www.cityam.com/uk-inflation-to-fall-to-lowest-level-since-march-2022-but-bank-of-england-still-tipped-to-hike-interest-rates/

Peak of 6.5% in 2024. Also FTSE100 down below 7,000 then too.

Good post thanks. 

BoE rate of 6.5% early 2024 is surprising to many.

Just about everything I read is saying the UK is in an awkward spot when compared to other similar economies, the mood music is all consistent with that 6.5% in early 2024 and possibly very slow to retreat to avoid a most horrible bounce with inflation. 

I guess so much super cheap money for too long and all that QE has got us in this position, it also appears Brexit has just added to our headwinds. 

With all the above in mind I'm guessing when BoE rate is 5.75% or possibly 6% could be the best time to secure an annuity, any views most welcome?

If the markets really expect rates to hit 6.5% then why would 1 and 2 year gilts only be at 5.25% and 5.15% respectively, there is an obvious arbitrage opportunity.

They must expect rate increases to be short lived eg 2yr 5.15% . The 6m bond yield is 5.7% so room for more from BOE.

United Kingdom 6 Month Bill Yield - 2023 Data - 1994-2022 Historical - 2024 Forecast (tradingeconomics.com)

Cus

Looks like the CPI rate for June has pushed down market expectations for the peak BOE rate, and gilt yields dropped. Maybe the best moment for an annuity has now passed.  I hope for the 2mn people with fixed rate mortgages that are about to end that we see inflation tumble more than expected.