BOE 3rd November Rate Announcement
Discussion
BoRED S2upid said:
This. Definitely this. I’m pretty certain (I’ve not tried) I could go out tomorrow and spend £5000 on goodies at 0%. Plenty of free money still out there. The pain hasn’t kicked in yet.
Agreed, it partially has for us as I had to renew our mortgage at 2.97% last year, the previous fix was 1.61%. I was annoyed at the time it had gone up so much, but looking back now we got off lightly.It is fixed for five years now, so none of these additional rises are going to affect me in the near future. What is annoying is this was more luck than judgement, if our fixed rate was ending this year I would be very nervous right now.
My credit card are offering me cash to my bank account for 12 months with a 4% fee which is still very cheap considering the 10%+ inflation we currently have. Obviously they want people to borrow the money, piss it up the wall and then after 12 months be stuck on the 22.9% APR rate
If you have no mortgage you are unlikely to need to borrow money anyway, so as far as I can tell there will be no pain to feel. If you are in this situation and you have savings, then you are actually better off.
As I said earlier, these rate rises squeeze the people who are most likely not going out and spending lots of money anyway.
Older people paid off mortgages with fixed and moderate incomes will still be feeling pain I’d imagine.
Ie, unlikely to be getting big pay rises at start of careers etc.
This tightening will surely be having an effect but it’s going to have to go higher for longer to impact a good chunk of the population who now are of the mindset to buy now as they’ll have to pay more later.
The last hurrah of the free money binge?
Ie, unlikely to be getting big pay rises at start of careers etc.
This tightening will surely be having an effect but it’s going to have to go higher for longer to impact a good chunk of the population who now are of the mindset to buy now as they’ll have to pay more later.
The last hurrah of the free money binge?
Mr Whippy said:
This tightening will surely be having an effect but it’s going to have to go higher for longer to impact a good chunk of the population who now are of the mindset to buy now as they’ll have to pay more later.
Good point, we are currently in a crazy situation where it is cheaper to buy a brand new car than a second hand car due to finance rates. You can also effectively own the car for free as new car prices are increasing so quickly that they are dragging second hand prices up with them.People are able to sell cars they have owned for two or three years for pretty much the price they paid for them.
Joey Deacon said:
Totally agree, here is the breakdown :
8.8 million (36%) were owned outright
6.8 million (28%) were owned with a mortgage or a loan
4.8 million (19%) were privately rented
4.2 million (17%) were in social rent, mainly rented from housing associations and local authorities
Going by these figures 28% of houses have a mortgage, so that means 72% of people are basically unaffected by these rate increases. The rich people have got far richer since Covid, and from my experience they are out spending money like there is no tomorrow.
Want to buy a car? a years waiting list, want to buy a Rolex? no chance, want to go to a restaurant in London? fully booked. As soon as a new supercar is announced, it is sold out in 2 minutes. The rich have tons and tons of money, mortgage rates are of no concern to them.
Raising interest rates is going to make little difference to inflation as the people who are spending all the money are not affected by interest rates.
The only people it affects are those with a mortgage and those who are coming off a fixed rate deal. Most likely people in the middle who are neither rich nor poor, but are getting utterly screwed by the BoE continually putting up rates.
I personally don't think raising rates is going to make any difference to inflation, it certainly hasn't so far.
Don't think it's true that only mortgage holders are seeing increases- private rents have been shooting up in price for a good while too.8.8 million (36%) were owned outright
6.8 million (28%) were owned with a mortgage or a loan
4.8 million (19%) were privately rented
4.2 million (17%) were in social rent, mainly rented from housing associations and local authorities
Going by these figures 28% of houses have a mortgage, so that means 72% of people are basically unaffected by these rate increases. The rich people have got far richer since Covid, and from my experience they are out spending money like there is no tomorrow.
Want to buy a car? a years waiting list, want to buy a Rolex? no chance, want to go to a restaurant in London? fully booked. As soon as a new supercar is announced, it is sold out in 2 minutes. The rich have tons and tons of money, mortgage rates are of no concern to them.
Raising interest rates is going to make little difference to inflation as the people who are spending all the money are not affected by interest rates.
The only people it affects are those with a mortgage and those who are coming off a fixed rate deal. Most likely people in the middle who are neither rich nor poor, but are getting utterly screwed by the BoE continually putting up rates.
I personally don't think raising rates is going to make any difference to inflation, it certainly hasn't so far.
Fusion777 said:
- private rents have been shooting up in price for a good while too.
Not least because our illustrious government has made the BTL game a whole shed-load less attractive than it used to be. Landlords are increasing rents to try to cover their increased taxes and other additional costs.Jurgen Schmidt said:
Not unsurprising given the noise in the media beforehand - Inflation still seems uncontrollable to me, interest rates could be 20% and it'll have minimal effect on inflation and that's because it is systemic
Agreed, the government printed far too much money during Covid, and as mentioned in another thread a large percentage of houses are owned without a mortgage. People with no mortgage and a bit of money are still going to be spending like it is going out of fashion, this makes no difference to them.These interest rates are making little to no difference to inflation, all it is doing is punishing the people who have a mortgage that is coming to the end of it's fixed rate.
Joey Deacon said:
Agreed, the government printed far too much money during Covid, and as mentioned in another thread a large percentage of houses are owned without a mortgage. People with no mortgage and a bit of money are still going to be spending like it is going out of fashion, this makes no difference to them.
These interest rates are making little to no difference to inflation, all it is doing is punishing the people who have a mortgage that is coming to the end of it's fixed rate.
I don't disagree and it highlights how blunt the instruments the government and BoE have to control inflation. I think they have far more opportunity to create inflation than control it and should think more carefully about using policies which lead to the former.These interest rates are making little to no difference to inflation, all it is doing is punishing the people who have a mortgage that is coming to the end of it's fixed rate.
Joey Deacon said:
Jurgen Schmidt said:
Not unsurprising given the noise in the media beforehand - Inflation still seems uncontrollable to me, interest rates could be 20% and it'll have minimal effect on inflation and that's because it is systemic
Agreed, the government printed far too much money during Covid, and as mentioned in another thread a large percentage of houses are owned without a mortgage. People with no mortgage and a bit of money are still going to be spending like it is going out of fashion, this makes no difference to them.These interest rates are making little to no difference to inflation, all it is doing is punishing the people who have a mortgage that is coming to the end of it's fixed rate.
But it’s still -5% real rates, so the FOMO buy now before it costs more later is still a big factor.
I think, as I’ve said before, we’ll get to 8% ish as rates intersect finally falling inflation and real rates become positive… a crash will drag inflation lower still, and rates will ease back to 4% to stimulate things.
Their projections have been and will continue to be wrong. Have they ever been right?
The architects of this mess are trusted to tell you how it’ll play out and how they’ll fix it?
I was half expecting 0.5% rise, but half expecting 0.25%.
I still fully expect the rate to exceed 5% by later this year and can't help thinking that a tepid attempt today at just +0.25% is making that all the more likely now.
A 0.5% today had a chance of stemming the crazy spending of the middle wealth households, and resulting inflation faster, and maybe having a chance of rates stopping at 5%, but there you are. A lot of considerations to balance for those who make these decisions.
I still fully expect the rate to exceed 5% by later this year and can't help thinking that a tepid attempt today at just +0.25% is making that all the more likely now.
A 0.5% today had a chance of stemming the crazy spending of the middle wealth households, and resulting inflation faster, and maybe having a chance of rates stopping at 5%, but there you are. A lot of considerations to balance for those who make these decisions.
Edited by AdamV12V on Thursday 11th May 14:25
AdamV12V said:
A 0.5% today had a chance of stemming the crazy spending on the middle wealth households, and resulting inflation faster, and maybe having a chance of rates stopping at 5%, but there you are. A lot of considerations to balance for those who make these decisions.
They will need to go 0.5% next time but isn't Bailey known for always missing an opportunity?Joey Deacon said:
Jawls said:
Plenty of people own their home outright. They aren’t directly affected by rates.
And there’s another set of people who can comfortably afford the increased costs.
So plenty of folks to fill shopping centers etc.
The problems hit the people you don’t see.
Totally agree, here is the breakdown :And there’s another set of people who can comfortably afford the increased costs.
So plenty of folks to fill shopping centers etc.
The problems hit the people you don’t see.
8.8 million (36%) were owned outright
6.8 million (28%) were owned with a mortgage or a loan
4.8 million (19%) were privately rented
4.2 million (17%) were in social rent, mainly rented from housing associations and local authorities
Going by these figures 28% of houses have a mortgage, so that means 72% of people are basically unaffected by these rate increases. The rich people have got far richer since Covid, and from my experience they are out spending money like there is no tomorrow.
Want to buy a car? a years waiting list, want to buy a Rolex? no chance, want to go to a restaurant in London? fully booked. As soon as a new supercar is announced, it is sold out in 2 minutes. The rich have tons and tons of money, mortgage rates are of no concern to them.
Raising interest rates is going to make little difference to inflation as the people who are spending all the money are not affected by interest rates.
The only people it affects are those with a mortgage and those who are coming off a fixed rate deal. Most likely people in the middle who are neither rich nor poor, but are getting utterly screwed by the BoE continually putting up rates.
I personally don't think raising rates is going to make any difference to inflation, it certainly hasn't so far.
AdamV12V said:
I still fully expect the rate to exceed 5% by later this year and can't help thinking that a tepid attempt today at just +0.25% is making that all the more likely now.
You seem fully signed on the current economic delusion that when people are struggling with supply-side inflation (i.e. largely from rocketing energy prices) and their spending is already curtailed the best thing you can do to help the economy is,- Increase taxes, and
- Increase the cost of housing by hiking interest rates.
- Try to hold wage increases at a level far below the rate of inflation.
trickywoo said:
AdamV12V said:
A 0.5% today had a chance of stemming the crazy spending on the middle wealth households, and resulting inflation faster, and maybe having a chance of rates stopping at 5%, but there you are. A lot of considerations to balance for those who make these decisions.
They will need to go 0.5% next time but isn't Bailey known for always missing an opportunity?As the cap rose to where it is now, energy inflation as a reading should be very low.
It'll mean another 0.25% rise at the next meeting. And then once corrected figures for inflation (basically stripping out energy) show that inflation is running hotter and increasingly embedded in pay rises etc, we'll be needing to keep going higher and higher.
There is no point fighting it.
Just join in. If there is anything you need in the next year or two, buy it now. Diversify your savings. Invest in material things that add quality and capability to your life.
Seek out every last penny on savings when spending, and maximise earnings on everything else.
Just absolutely game the system for everything it's worth.
Be greedy, but cleverly.
If you can't beat them, join them.
Panamax said:
You seem fully signed on the current economic delusion that when people are struggling with supply-side inflation (i.e. largely from rocketing energy prices) and their spending is already curtailed the best thing you can do to help the economy is,
It not a "current economic delusion" its a long standing proven economic process, accepted by the vast majority.- Increase taxes, and
- Increase the cost of housing by hiking interest rates.
- Try to hold wage increases at a level far below the rate of inflation.
I am intrigued however - what alternative strategies are you advocating then to curb inflation? Presumably either doing nothing, or reducing interest rates, or giving everyone huge pay rises or something completely different?
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