2Y or 5Y - Brexit baby

[Jokester]

Brexit is coming - therefore I don't see rates rising.

Yep. If they do go up they will come crashing back down in 2 years time.

Either that or Brexit will be an immediate economic success!

 

[Mercenary Keyboard Warrior]

I can see them increasing back to 0.5% with a reasonable chance of this occurring within the next 12-24 months. I think the next rate hike won't come until 2018 though.

I can possibly see them going as high as 0.75% by the end of 2019.

In both scenarios you should still be able to get a 5 or 10 year fix at a reasonable rate, it's only going to be more costly to do so if the base rate rises quickly, which I don't think is likely.

In counter to the argument about the vote, have you seen this?

Yep they change semi frequently.
I have no doubt they will use interest rate rises to curb inflation, the question is will inflation change from imported currency inflation to domestic inflation.
There is certainly a risk of it because once you start the inflation spiral its hard to break, you only have to follow news etc to see that people are worse off, when worse off people look to push for increased wages. Increased wages lead to? Yep inflation
Hence the term inflation spiral.

 

[Mercenary Keyboard Warrior]

Your fixing now based on what might happen in 6-8 years time doesn't make any sense to me.

Brexit is coming - therefore I don't see rates rising. trust me if they do rise they will go back down. Brexit is going to cripple this country. all these multinationals will be moving headquarters into France, Germany, etc.

So I say fix for 2 years. then when Brexit happens fix for another 2 years as they will be going nowhere. then in in 4 years time you should be fixing for 10 years.

No probs, lets not get hung up. In my role (finance director) I do often have to do longer term forecasts and projections, so naturally I think longer term than 2 years.
I get its a completely different mindset so understand why some don't agree.

I wouldn't be wanting to fix for 10 years in 4 years because I shouldn't have a mortgage to last even close to 10 years at that point. Although if I am correct and fixed in lower than base rate I will be more than happy to make minimum payments and invest the spare capital. That is assuming I don't move again though, our bedroom ratio of 2:1 feels a bit low, should maybe be looking for 3:1 or higher

If anything I see Brexit causing more inflation at the start, probably with a mini recession. That recession could raise rates, a lot will depend on availabilty of capital, rates were going up quickly in the last one until the government stepped in with massive cash injections under their borrow to lend program (forget the real name now but that was the jist of it), that crashed rates and is why rates remain low now, banks don't need borrowers funds.
Eg I had an ISA paying nearly 4% when the base rate was 0.5%, because the banks and financial institutions were after peoples money so they could lend it, savers were moving from account to account as rates went up. Now they are moving from account to account as rates go down, although there is some green shoots signs of some slightly better savings rates being available.

 

[ahar]

Worth remembering as well that the Term Funding Scheme comes to an end in Feb '18 which is likely to push up mortgage rates if it is not extended. I think the BoE were going to announce whether they will continue it some time in the Autumn.

 

[Mercenary Keyboard Warrior]

Worth remembering as well that the Term Funding Scheme comes to an end in Feb '18 which is likely to push up mortgage rates if it is not extended. I think the BoE were going to announce whether they will continue it some time in the Autumn.

Ah thanks that was what I couldn't remember, didn't realise it was that close again, how time flies

http://www.bankofengland.co.uk/markets/Pages/apf/termfunding/default.aspx

Just in case people were not aware of it, above link to BOE page.
"The Term Funding Scheme (TFS) is designed to reinforce the transmission of Bank Rate cuts to those interest rates actually faced by households and businesses by providing term funding to banks at rates close to Bank Rate. "

As I mentioned above, it was what dropped rates actually available dramatically as despite the base rate cuts we saw they were not getting passed on.
It was a blunt tool to force the market place, directly impacting savers, many of whom still hold a grudge

 

[Psycho Sonny]

That is assuming I don't move again though, our bedroom ratio of 2:1 feels a bit low, should maybe be looking for 3:1 or higher

lolwut?

 

[Mercenary Keyboard Warrior]

lolwut?

Yeah to be honest i would probably focus on acreage rather than rooms, they tend to be a natural partner