Will interest rates continue to rise?

Question

Following the recent hikes in the rate of interest i was wondering how long it is believed that these increases will be necessary to curb inflation? Are they set to began to level off and decrease any time soon or is the forseeable future set for more and more increases?

Answer 1

This is a very good question, and requires much discussion. What ever you do, DO NOT listen to estate agents or mortgage advisors, remember they are there to make money and all of them want you to buy what they have to sell, so that they can make money, mortgage advisors get their fee of the lender and estate agents from the vendor (House seller). Also ignore and property magazines, their main income is from the agents that advertise in them, they will not print any thing that would stop agents from advertising in their magazines. Interest rates will continue to rise just as they did in the past (On more than one occasion).

The BBC have a mortgage section with a calculator on it, it tells you how much repayments will be if you borrow "x" amount of money at the current rates, but below this, there is another section that tells you what it would be if interest rates rise to 12%. Anyone with any knowledge of the market and history knows that it is going to be a difficult period for all homeowners alongside those with deb. In this example, the BBC are sending a warning out to consumers, attempting to educate them in a subtle way.

House prices will inevitably fall. All the unfortunate people that have recently brought, with a 100& mortgage will end up in negative equity and may even face repossession orders. Some people will get second jobs to pay the difference; others will complain and moan about the situation they have found themselves in, although not acting will cause them to lose their home. The banks know this is going to happen; witch is why they are lending as much as possible to carry them thought the next 5years or so. The only people that are going to benefit from the coming years will be the banks. Remember that once your property is repossessed and the bank has sold it on, you are responsible for the difference between what the bank sold it for and what you borrowed.

It is not all doom and gloom however; anyone with saving will enjoy good returns on their money.

So, to answer your questions, inflation will rise. Interest rates are not due to level off any time soon and the future is unknown, but we can make educated guesses.

Recent events:

February 15, 2007: A rise to 5.5% would get inflation on target, says governor, as a report predicts rapidly growing economy.

January 11, 2007 The Bank of England today bucked tradition and shocked the City by raising interest rates by a quarter of a percentage point to 5.25%.


November 9, 2006 The Bank of England today raised interest rates by a quarter-point to 5%, erring on the side of caution as it seeks to keep a lid on prices.

August 3, 2006 The Bank of England today delivered a blow to homeowners as it raised interest rates for the first time in two years in a pre-emptive strike against inflation. In a precautionary move after inflation went up sharply in June, the Bank's monetary policy committee (MPC) lifted borrowing costs by a quarter of a percentage point to 4.75%.

Answer 2

Interest rates will react to the economy. If you are talking about mortgage rates they are not really tied to the Fed. Don't pay too much attention to that. In the first place the Fed is always lagging. The best thing to look at is bond yields. Corporate and Government. Bonds are still staying flat because investors think inflation is under control into the near future. (Three to six months)

Keep in mind that if you own a property...inflation is your friend. Values increase while your interest rate is locked at pre inflation levels.

Answer 3

Omg your just too funny, hikes in the rate. Interest rates used to be above 14% less than a decade ago. Back when you was probably riding your malibu barbie big wheel. Short term rates are what the fed rate adjusts which affects credit cards and lines of credit, consumer loans. The mortgage bond market is what determines long term interest rates. It is easily followed by watching the 10 year treasury rate. It is very unlikely that mortgage interest rates will go down by much if at all. With the impending foreclosure climate looming it is most likely rates will have to increase to attract mortgage securities investors.

Answer 4

FYI - Rate movements on Home Equity Lines of Credit and credit cards follow the movements of the Fed rates.

Mortgage rate movements, on the other hand, DO NOT directly correlate to Fed rate movements. A better indicator of mortgage rate movements is the 10 Year Treasury.

http://mortgage-x.com/trends.htm
http://www.forecasts.org/fha.htm

Answer 5

My mortgage advisor told me that she thinks they will go up another couple of times and then level off. This is only her opinion though so who knows what will really happen, I'm paying more for a fixed rate mortgage just in case!!!

Answer 6

it form of feels like the present momentum interior the economic equipment is for costs of pastime to upward push. The Fed seems maximum worried approximately struggling with inflation, which they do via raising costs.

Answer 7

yes

Answer 8

i hope not. how much more should we pay to be free?