"Bank of England To Cut Interest Rate by Up to 2%"

Dan_Collins_2

Good point !!!!!! here. New trackers are higher than most fixed, although if I was changing now I would fix for 5 years unless planning to move.

bankersmug

Given the need to balance curbing inflation with maintaining growth, I suspect Interest rates will remain the same, just to steady the ship in a sea of change.

Tozer

I think in times of recession inflationary pressures become secondary to interest rate concerns - mainly as the economy slows down of its own accord anyway (job losses, lower outputs, lower prices).

I personally would wait and see if I were remortgaging right now. Interest rates will come down - I suspect by a fair amount although bit by bit. However, don't expect fixed rates to follow suit as the margins which lenders have to play with are extremely tight - particularly at the moment.

For me, I'd probably look to fix savings rates (which I've just done with my ISA at 6.5%) and to have base tracker borrowing.

minimike2

Exactly re trackers - meaning the only people that will benefit from base rate cuts are people already on trackers (like me ) but thats not where the problem lies!

No1Joker

I agree with most that interest rates will slowly decrease over the next 12-18 months.
A couple of things i'd like to say is that the MPC set rates for the medium term (say 2 years time), so current inflation is less of a concern than persistent inflation. Also inflation is a lagging indicator of past economic activity (which has been pretty good over the last decade) it is the rate hikes of the past which control current inflation.

The reason the BoE haven't been quick to slash rates is because Mervyn King is an exceptionally clever man and he knows the cuts won't be passed on because of the current liquidity problems in the finance sector. He'll want those problems to subside before cutting rates more than 25/50 bp.

Also (pessimist moment here!) don't assume the UK cannot have a 20% house price correction - US Style - especially in some areas of the country. The big city job cuts/bonus cuts will filter through to everyone.

a_gwtw

Hi guys,

I also read this news on London Lite last night and am now really unsure what to do next. I'll have to remortgage at the end of this month, and my mortgage provider offered me a 5 year fixed rate of 5.7% (they don't do 2/3 years now). Should I take it or hang on a bit for the rate to go down? Thing is if I hang on with their variable rate, it'll be nearly 7%, which is quite bad. But if I accept 5.7% for the next 5 years when the rate can go down to, say 4%, that's not good either.

I have no clue how the financial/monetary market here works, so your advices are highly appreciated.

Thanks,

maveli

minimike2 wrote: »

Exactly re trackers - meaning the only people that will benefit from base rate cuts are people already on trackers (like me ) but thats not where the problem lies!

Glad to see atleast one mortgage adviser on a tracker rate when most of them on this forum recommending a 5 year fixed

Dan_Collins_2

maveli wrote: »

Glad to see atleast one mortgage adviser on a tracker rate when most of them on this forum recommending a 5 year fixed

I am not recommending 5 year fixes, I said that I would go for a 5 year fix. I would never make a recommendation based on info on this forum.

Most of the people I am seeing however are talking about 5 years fixes as they are worried about what will happen next. I think that in some cases people worry more about beating the boe than trying to find the right product for them. Each person is different though!

Treadmill

2% Eh ? I'd still suggest a long term fix though as when the Cons get in at theye next election interest rates will go through the roof as they won't just ignore inflation.

MissMoneypenny

Dan_Collins wrote: »

Its time people realised that the issue we are having runs far behond the BOE base rate.

Its about culture and greed and bad trading and risk taking!

That is the culture that this government have encouraged. Borrow high amounts and spend, spend, spend and just look at how rich you are because the value of your house is now so inflated. No mention of the bust that would follow the boom, except to say there wouldn't be a boom or bust:rolleyes: Then they created a massive boom and debt at an all time high.

People believed the hype. Just look at how many clapped Blair in his parting speech to his constituency when he told them to look at how rich Labour had made them as their house prices were so high. No mention of things like their children couldn't afford a house or that council tax had doubled, taxes had been raised, oil prices had gone through the roof and their children were now having to take out student loans.

The government sung the song some people wanted to hear and now it is time to pay the piper. It always was going to end in tears.