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DementedTuna

Interest Rates: Your Predictions For 09/10.

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The way I see it, interest rates really are the primary housing market driver.

There are plenty of other factors, but none of them as directly relevant as "minus several hundred pounds per month cheaper". Over the past year, we've had people paying virtually zero interest on their mortgage, and significantly reduced rates.

They may be hard to get, but for those capable of landing one, the rates are good. I'm pretty sure it's the only reason why there has been a spring bounce this year. If rates were high, no-one would have gone for it at all.

So, when do you all see the rates going back up to 5%, with mortgage rates a fair bit higher, so we can get on track with the crash?

I'm gonna pick July 2010.

I figure Labour might give the market one last desperate bit of CPR in Q1 2010 before they go.

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WHEN..........BOE RATE............ AVERAGE SVR

now..............0.5%................approx 5.5%

sept 09........0.75%................approx 6.5%

April 10.........1.00%............... approx 7.5%

June 10.........1.25%............... approx 8.5%

August 10........1.75% ................approx 9%

sept 10.......... 2.5% ....................approx 10%

And going up

BOE behind the curve all the way

Edited by Flat Bear

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they should be back to 5% by next July but I doub't very much they will be

but what probably will happen is a collapse in confidence in the UK's finances and Gilt yields going through the roof which will knock onto mortgage rates.

so yes much, much higher mortgage rates, could be as soon as the 2qtr GDP figures come out July (I think), they will try and keep the base rate low for as long as possible, unless the £ totally collapses then Iceland here we come

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The way I see it, interest rates really are the primary housing market driver.

There are plenty of other factors, but none of them as directly relevant as "minus several hundred pounds per month cheaper". Over the past year, we've had people paying virtually zero interest on their mortgage, and significantly reduced rates.

They may be hard to get, but for those capable of landing one, the rates are good. I'm pretty sure it's the only reason why there has been a spring bounce this year. If rates were high, no-one would have gone for it at all.

So, when do you all see the rates going back up to 5%, with mortgage rates a fair bit higher, so we can get on track with the crash?

I'm gonna pick July 2010.

I figure Labour might give the market one last desperate bit of CPR in Q1 2010 before they go.

My prediction: low for the rest of this year, and the first three quarters of next, and then rates will go up in earnest! And then it will be REPO MADNESS! Can't wait! :-D

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My prediction: low for the rest of this year, and the first three quarters of next, and then rates will go up in earnest! And then it will be REPO MADNESS! Can't wait! :-D

You mean 1 month before my fixed rate ends..

I was hoping for the hyperinflationary apocolypse to be finished by then, and my mortgage reduced to thr equivilent of 2 1/2p

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So, when do you all see the rates going back up to 5%, with mortgage rates a fair bit higher, so we can get on track with the crash?

I'm gonna pick July 2010.

The effects of QE will be visible from September onwards. I can see interest rates going up by Spring 2010 to 8%, so June/July may be a good call - they'll be held back if possible until after the general election. However I really can see interest rates heading into double figures by the end of 2010; inflation will be far higher even so.

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WHEN..........BOE RATE............ AVERAGE SVR

now..............0.5%................approx 5.5%

sept 09........0.75%................approx 6.5%

April 10.........1.00%............... approx 7.5%

June 10.........1.25%............... approx 8.5%

August 10........1.75% ................approx 9%

sept 10.......... 2.5% ....................approx 10%

And going up

BOE behind the curve all the way

I think the bank will not raise rates until we have clear signs that a sustainable recovery is on the way, and due to global nature of this thing all the bad news is out in the open.... whilst some "green shoots" may be around here and there there is still no recovery, we still have not had a qtr of going forwards or even standing still and there are things like for instance the east european debt issues to fully emerge.

Personally I don't think we will see rates going beyond 1% this year, and maybe not even beyond 2% next year. This will be doubly true if the pound continues its min-recovery as this will help keep inflation in check a little.

Don't forget we could yet see a japanese situation where rates remain low for quite a while as the economy is in a sustained weak recovery mode.

Even if rates do rise more quickly we will in turn find that banks I suspect will cut their margins so that mortgage rates may not rise much at all.... if interest rates for mortgages are around 5% now in a 0.5% environment then we could see mortgage rates still at 5% in a 2.5% boe environment.... that would be possible because as times move on there will be less need for excess profits as the capital reserves would have been rebuilt within banks... much of the bad news in terms of repos etc will have been sported... the housing market will have reached its bottom.. and the outlook for employment would be more positive... in other words they'd need less margin as they'd be carrying less risk and I suspect margins will gradually reduce as competition between the banks gradually re-emerges.

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The effects of QE will be visible from September onwards. I can see interest rates going up by Spring 2010 to 8%, so June/July may be a good call - they'll be held back if possible until after the general election. However I really can see interest rates heading into double figures by the end of 2010; inflation will be far higher even so.

Well 5.75% was the peak before and look what happened. Do we have less debt that needs servicing now so the public won't all default? No.

Rates will stay low for the next 2- 3 years but will probably not go back above 5.75% for a generation. Savers beware.

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Someone remember to revive this thread next year!!!

My thoughts are that

- current green shoots are a bit of a mirage: rates to stay under 1% for the rest of 2009

- actual green shoots and inflation begin to kick off in mid 2010, with base rate rising to 4% by summer 2010 and 5%-6% by September 2010

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Rates will stay low for the next 2- 3 years but will probably not go back above 5.75% for a generation. Savers beware.

A generation? Don't think so matey. Expect 5% and above by early 2011.

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All it will take is rates to go to 2 or 3% to cause mass defaults. Remember all it took last time was rates of 5-5.75%, and rates track the base rate on vastly less favourable terms now. I think they may try and scare money into bonds again, and be forced to stop QE and tighten fiscal policy to do this. Should oil fall back after the summer i think they will maintain this scenario, of rates 0.5% to 1.5% for a number of years.

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A generation? Don't think so matey. Expect 5% and above by early 2011.

I would quite happily bet money on them staying low., In fact I have as I locked into a lifetime tracker October last year (base rate + 1.59%) and am now paying a tiny amount on my mortgage. I am tied in till december 2011 and will be able reserve a fixed rate 3-6 months before than and am quite confident there will not be a mad rush.

This is the reality. Great Britain cannot cope with rates >5% . When rates were 5.75% there was real pain and now that they are 0.5% there is still severe pain. Lending and mortgage rates are going up without the help of base rates. Normally this is the effect the BOE would hope to achieve by raising interest rates and thus controlling inflation but now it is happening without raising rates. We are led to believe this is pricing in future rate rises but do we honestly believe that if rates were to actually rise they wouldn't be immediately priced in again?

In my opinion the banks have been very clever and played this in a way that they can keep their margins extremely high forever. By keeping mortgage and lending rates high when the BOE rates is extremely low the BOE will be too scared to raise rates again for fear of further credit crunchiness.

Deflation.

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I would quite happily bet money on them staying low.

OK, I'm up for it, how much do you want to bet and what are your terms?

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It will be the same, near zero for many many years to come.

And after a ZIRP in Japan for years, house prices fell anyway.

House prices driven by access to credit rather than its price.

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Base rate will stay low for at least the next 3 quarters...any other rates will depend on available funds and risk associated with them. ;)

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And after a ZIRP in Japan for years, house prices fell anyway.

House prices driven by access to credit rather than its price.

Yup, the banks just aren't lending at the mo, because they haven't got the last lot back yet.

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I don't think you really understand what drives interest rates.

I think anyone who joined up in 2006 calling themselves "nohpc" doesn't know very much about anything.

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OK, I'm up for it, how much do you want to bet and what are your terms?

Too long term a bet for my liking. I'll make month to month bets pre BOE rate setting instead.

I have already bet 180 grand mortgage on rates staying low though ;)

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Too long term a bet for my liking. I'll make month to month bets pre BOE rate setting instead.

I have already bet 180 grand mortgage on rates staying low though ;)

Rather you than me. :lol:

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Fixed rate building society savings bond for a year will be 5% by end of 2009, house prices will still be falling, mortgage rates svr about 6%. But hey, what do I know?

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