[I guess that s the £1m question on everyone's lips!!!
Below is an article extracted from http://www.thisismoney.co.uk and written by Andrew Oxlade on 04 January 2012
The latest is that the NEXT interest rate rise would be towards the end of 2015! Somehow a great news for those with a portfolio, Even if the house prices are not going up as yet, (the last budget forecast predicted house prices to increase by 15% up to 2017-2018), the rental market is strong!
We have a few years to plan carefully our cash flow strategy...
What's your plan???]
We wish we could give an exact forecast on the future of the UK base rate, but we can’t. We CAN, however, arm you with the right information and views from those in the know so you can make your own call (this round-up is updated every few days).
The MPC voted to ‘hold’ again in December and a rise looks a long way off – the range of predictions are 2013 to 2016.
The grim new forecasts for the economy in November’s mini-Budget made rate rises even less likely. And the worsening state of the eurozone crisis – which will damage the UK economy – continues to push out predictions of the first UK bank rate rise.
There was a particularly sharp move in mid-December as markets appeared to all but give up hope of a rate rise before the middle of the decade. The forecast has since remained fairly static, predicting the first rise in late 2015.
The prospect of low rates for years exists despite inflation remaining painfully high – it hit a peak of 5.2% (11 October) but is slowly easing back, down to 4.8% in the latest figures (13 December). Policymakers are adamant it will fall back further next year, and be under the 2% target by 2013.
The committee has dismissed inflation concerns and is more focused on heading off a double-dip recession. At its October meeting, it opted to restart its quantitative easing programme – an electronic form of money printing. The MPC minutes revealed members talked about £100billion of QE before agreeing on £75billion.
The vote was 9-0 in in favour of holding rates in December - the fifth month in a row of unanimity. Members had been locked at a 7-2 vote for two months before that and it was 6-3 earlier this year when a rate rise looked a possibility.
That shift in voting reflects the remarkable and rapid movement in forecasts for rates last summer, with predictions for the first rise, week by week, taking huge strides into the future:
- In March/April, a rise was seen as imminent;
- In June, the forecast was for a hike in July/August 2012;
- By early August, futures markets earmarked early 2013 for the first increase;
- By October, the market priced early 2014 for a rate rise.
- By November, the market priced early 2015 for a rate rise.
- By mid-December, it suggested late 2015.
[Excited? Disagree? Not bothered?
Let me know by leaving your comments below...]
Thierry, thanks for sharing. With all the info out there, its helpful to have such a concise summary. As a portfolio landlord, I like short and sweet. Will continue to refer to the blogs for a heads up and look deeper where necessary. Cheers. Lawrence
An interesting and informative article. The housing market is seen as the catalyst to kick start the economy and this will of course have an impact on those, with a mortgage, already living relatively on the border line. Let’s see what happens? Thanks for sharing.
Well, the experts have been so wrong and so often I don’t listen to them any more!
The important thing is to assume that they will go up sooner or later and do everything you can to protect yourself for when this happens. My strategy is to manage my portfolio very tightly, sell the ones with most equity/worst current pay rate to utilise my annual CGT allowance, and put as many of my problem properties as I can on our Rent to Buy scheme.
Thierry a very informative article and definetly valid for the times we are in. Well done and keep them coming
Great news, thank you for great article
Dear All,
Between 1980 and 1997 I lived and worked in HK, Taiwan and Japan. Having been living in the UK since 2001 I am constantly dismayed at the nonsense written about interest rate rises. When propert people were being forced by banks to take “swaps” to protect them from further rises, I said LOOK AT JAPAN.
Now I still say look at Japan. Twice the population of the UK and yet they have had no interest rises since 1990.
Why do we think we are smarter than the Japanese?
Glenn.
I believe that one concern the government have is the number of reposessions an interest rate rise would create. Many homeowners are managing to pay their mortgages only because of the low interest rates. Many others have secured loans recently on these relatively low rates. We need to see some sustainable increase in house prices so that lenders can have sufficient confidence that house prices will not fall further and get LTV mortgages back up nearer 90% before interest rates start to rise.
great blog, keep them coming
Thierry what’s your view on impact of Olympics games on London rents, particularly East & Central London? Thanks
thats a good point keith thanks
hi Johnnie that exactly the point: bcos of what’s going on in Europe, the interest rate will NOT go up anytime soon
I wonder if the I.R. is going to go up sooner than everybody thinks with the Euro Zone issues…