Are UK interest rates likely to go up or down?

Question

I am umming and ahhing about fixed rate or variable rate remortgage. Variable rate is 4.95 (0.3% below BR) and fixed is 5.19.
Will be agreeing to 2 year deal.
Thanks so much for your thoughts!!

Answer 1

What you are thinking is that you might get advice to outsmart the banks, the professionals at this with hundreds of mathematicians, accountants, and actuaries working for them!

My advice is to look at what they expect, presume that they will get it right!!

Looking at a Variable rate of 4.95 and a fixed rate of 5.19 and assuming the above, I assume the bank is betting on the interest rates going up to a maximum of 5.18. They then add a margin (which is them charging you for the risk involved of them been wrong).

Essentially, I would make my decision on the below.
!) If you expect to have a bigger wage next year, I would pay less now (variable) and more later when interest rates rise! If money is not tight and you can afford to take the risk of interest rate changing to a large extent.

2)if my salary is largely going to be stable this year and next, and money is tight, I would go with the fixed rate interest rate and let the bank take the risk of been wrong!

The Fixed rate is only charging you what they expect you will be paying next year anyway! Sure they add a small charge for them talking the risk, but if money is tight, I would let them take the risk not you

Answer 2

Odds are on a period of general small increases after this long period of low rates - such is the normal cycle of the economy.

Rates may not go as stupidly high as early 80's, but are probably going to 'ease on up' a few more notches over the coming months and will not drop quickly within a years or so. So Variable terms will likley become less competitive than Fixed over the next year.

The rates you quote both look pretty good but it is very unlikely that rates will drop in the forseeable future -- unless something really unexpected happens, and even then not likley to drop substantially lower than now.

On fixed`terms you will at least know what you are paying for 2 years which helps with financial planning. You might save a few pounds on the variable option just now and for the initial period , but if the rates do go up, as they likely will next month, this advantage will be eroded and you might end up paying as much or more per month than the fixed rate within a few months and thereafter for much or possibly all of a two year period.

(You should also consider what tie in penalties are applied, if any, and what this would mean if for any reason you decided you HAD to change mortgage within 2 years)

Answer 3

Current evidence, statistics and forecasts would suggest rates will remain fairly stable over the next five or so years varying up/down by approximately one percentage point. But who knows what the Bank of England will do - the last two rises have happened when I thought it was bad for the economy to rasie rates, but what would I know I'm only a small business owner, who has studied economics at A'level and has followed the market and economic data for some time.

Answer 4

Up and Up - get a fixed rate - it's a no brainer really. - will go up at least .5 over the next 12 months.. so you'd be a lot better off over 2

Answer 5

They will be up and up for the next two to three years as infaltion is creeping up and the stock market is going up in value to which will put more money in the system and make infaltion creep further. I say its looks a good deal

Answer 6

They are likely to keep going up for a while,but as with anything financial,it`s always a gamble.

Answer 7

Almost certain to go up next month

Answer 8

Up for sure next month...After that, its anyones guess.

Good luck........

Answer 9

They will fluctuate.

No matter what you do, they will go up and down after you do it.