Reply to: Bank of England Base rate & other news

[Smoggy]

Annualised CPI inflation measured over the last 6 months is 3.4%. Inflation is proving to be quite sticky. I don't think we'll be seeing more than a token drop to rates for a while.

[jamesbrown]

Interestingly, it was a strong majority at 7/2 to maintain 5.25%.

This was the market expectation.

[Paddy]

Interestingly, it was a strong majority at 7/2 to maintain 5.25%.

Full report here:

https://www.bankofengland.co.uk/-/me...-june-2024.pdf

Which goes to show interest rates have more to do with the banks' profits and government bonds rather than consumer spending

[Martin@AS Financial]

Interestingly, it was a strong majority at 7/2 to maintain 5.25%.

Full report here:

https://www.bankofengland.co.uk/-/me...-june-2024.pdf

[Lance]

Yes and no.
https://www.ons.gov.uk/economy/infla...dservices/2024

The selection of items is ridiculous, for example Air fryers that have dropped in price 50%, colour cake sprinklers and data charges for for mobile phones. CPI no longer reflects the weekly shopping basket for necessities.

It's not supposed to be about necessities.
The biggest oddity of CPI measurement is it includes VAT (not on food obvs). If government wants to drop inflation by 10% they simply halve the VAT rate.


The suggestion that the Tories have cooked the books on this is mind bogglingly brain dead though.

[jamesbrown]

UK inflation back to 2% target for first time since 2021

This is fantastic news and it will be interesting to see when this will translate to a BOE rate cut.

Full story here:

https://www.reuters.com/markets/euro...21-2024-06-19/

Only in the headline sense, not in the details. Implied bank rate actually increased on this news. First cut is unlikely to happen before September.

[Paddy]

Seem more of a fantastic lie, and of course the timing is perfect for the Consocialists election. I'm sure that's just a total coincidence though!

Yes and no.
https://www.ons.gov.uk/economy/infla...dservices/2024

The selection of items is ridiculous, for example Air fryers that have dropped in price 50%, colour cake sprinklers and data charges for for mobile phones. CPI no longer reflects the weekly shopping basket for necessities.

[escapeUK]

UK inflation back to 2% target for first time since 2021

This is fantastic news and it will be interesting to see when this will translate to a BOE rate cut.

Seem more of a fantastic lie, and of course the timing is perfect for the Consocialists election. I'm sure that's just a total coincidence though!

[Martin@AS Financial]

UK inflation back to 2% target for first time since 2021

This is fantastic news and it will be interesting to see when this will translate to a BOE rate cut.

Full story here:

https://www.reuters.com/markets/euro...21-2024-06-19/

[Martin@AS Financial]

Taylor Swift’s London Eras Tour could delay Bank of England rate cut, analysts say

An interesting report from CNBC claiming that "Swiftflation" could defer a possible September rate cut.

https://www.cnbc.com/2024/06/14/tayl...-rate-cut.html

[Martin@AS Financial]

As you were:

Bank rate maintained at 5.25% - May 2024

Full report here:

https://www.bankofengland.co.uk/mone.../2024/may-2024

[Martin@AS Financial]

UK inflation slows its fall, pushing back rate cut bets

Interesting report from Reuters.

With inflation now at 3.2%, there is still some serious amount of work to be done to get it to the government set target of 2%. This will also be very much dependent on what happens on the world stage over the next few months.

Full story here:

https://www.reuters.com/world/uk/uk-...ch-2024-04-17/

[Martin@AS Financial]

Today, the Monetary Policy Committee voted by a majority of 8-1 to maintain the base rate at 5.25%.

Full report here:

https://www.bankofengland.co.uk/mone...024/march-2024

[Martin@AS Financial]

With most mortgages, you can overpay by 10% of the outstanding balance per year. As interest tends to be calculated on a daily basis, any overpayment you make means you should receive the benefit as of the next day. For example, if you have a £500,000 mortgage and overpay it by £50,000, as of the next day you are paying interest on the £450,000.

The price of mortgage rates are calculated according to risk so the lower loan to value (ie the more equity you have in your home), the lower your interest rate will be. Whilst it may not be possible to clear the entire mortgage, you may find you are able to achieve a lower rate by paying it down to get into the next bracket of products.

As long as the money isn't ear marked for anything else and the war chest remains healthy, I would always recommend trying to clear your mortgage as quickly as possible.

[vetran]

An interesting report from the Bank Of England which collects data from around 340 mortgage lenders:

https://www.bankofengland.co.uk/stat...s/2023/2023-q4

One of the key points that jumped out at me straight away is that the value of all residential mortgages have decreased by 0.1% from the previous quarter.

As interest rates remain bumpy, many clients that I am speaking to (who are in a fortunate enough position to do so) are making lump sum over payments off their mortgages.

Sadly only possible if you don't have an early termination penalty because you had the luck to set it 4 years ago, its gone in a yearish!!! currently its still cheap money!



Its going to get nasty out there very soon sadly.