At its meeting ending on 3 August 2022, the MPC voted by a majority of 8-1 to increase Bank Rate by 0.5 percentage points, to 1.75%. One member preferred to increase Bank Rate by 0.25 percentage points, to 1.5%.
from Bank Rate increased to 1.75% - August 2022 | Bank of England
Yeah, I don’t like to be all doom and gloom but that’s how it looks to my pleb brain.
I’ll just buy oil, gme, metals, BTC and hopefully save up enough for a house with a decent garden.
Don’t even get me started on the policies destroying farmers using world economic Forum policies.
On the housing I found affordability is all about being flexible on location rather than downsizing expectations to a cardboard box.
Basically what we expected. Tbh I didn’t even realise they needed to vote on it.
I think today’s rate was fully expected and more or less ‘priced in’; what we need to look at now is the forward projection of various economic indicators that the BoE are predicting.
You know the market is volatile and many people think that it going to go down further and that we are only seeing a bear rally, at the moment. So the call is: do you take advantage of the bear rally, stop the rout, and pull out or do you sit it out. If you pull out you may miss some of the gains on the way up but you certainly stop the possibility of any further losses.
I don’t the answer. But I know the fact that if the market falls 50% it needs to rise 100% to come back to where it is.
One other thing you need to take into consideration is who is driving the upward movement at the moment? Is it small retail investors or big institutions? Well here are some thoughts:
A major issue is that housing is always expected to go up. Negative equity is a no no (for all the folks buying multiple houses for Airbnb)
House prices are the only thing where you can have double digit inflation year after year without people complaining.
Apart from the ones trying to get onto the ladder.
I’m interested to know if peeps here think it’s better to pay for a 200k house over 40 years at a low monthly payment or 150k for the same house but a monthly payment at higher interest over 20-30 years?
Personally, I would like to be out of debt ASAP and be rid of any repossession risk, but Idont think your average Joe likes that considering the amount of people on twitter complaining about rates going up on their variable interest rates.
I literally just paid off my mortgage on tuesday, after selling almost half my Freetrade portfolio for that purpose back in in april. I was just holding as cash waiting for the fixed rate period to end and early repayment charges to go away. Total coincidence that BoE raised rates two days later!
It may not be the optimal strategy depending on stock market returns going forward, but it’s worth it IMO as most risk free option.
Leave the mortgage and invest in S & S ISA / LISA or pension. More tax efficient and I believe it will work out better in the long run.
If the interest on my mortgage hits 5% I may re-evaluate this strategy.
I’m hoping to just downsize to clear my mortgage personally later on as won’t need/want the larger size house for the 40years…but we will see how that plan works out ha.
You can’t put a price on being able to sleep at night! Seems smart to me.
Exactly, what is the ‘best’ financial strategy isn’t always the best for wellbeing and suitable for everyone!
In theory if the interest is low there’s no reason to pay it off.
However pure numbers isn’t the only calculation. How you feel about having the debt comes into it as well.
Also I think it’s a different answer if you’re taking out a 90% LTV compared to a 50%LTV. The former has a much higher chance of affecting your payments negatively when it comes to renewal if you still have a higher LTV and rates have gone up. The latter, if you go from 90% to 70% and the rates have gone up you may end up with a rate not far off what you we’re already paying for example
If you paid the minimum over 40 years. You’d have paid off very little by the time you get to your first renewal (assuming 5 years)
An example. £200k home, £20k deposit. 5 year rate at 3.5%.
Your £180k mortgage would have reduced only to £169k
You’ll not have made much is a dent. And that doesn’t take into consideration if house prices fall or rise.
Personally for a first time buyer (I’m one) I want to reduce the LTV in the first 5 years so I’m in a more comfortable position going forward
I would argue there is no better argument than the bank taking yer hoose for non payment in a depression. @Eden
Just make sure you can pay 
It was something I considered when in the process of buying my own house. How much can I afford; can I afford it if I lose my job or have to take a paycut; can I afford it if the rates go up in 5 years; can I afford it if the rates go up AND by house devalues.
It’s one of the big reasons I never bought a house where I currently work. The answer to almost all of those questions was no, not here at least.
I worry for those first time buyers buying £500k houses at the max they can afford with zero room for variance when their 3 or 5 year term ends.
Or those who maxed out buying a house and put a help to buy loan on top where they may find they can’t save enough to pay it off in 5 years time and will now be hit with interest. Those loans are as I understand it RPI +2% after the initial 5 year grace period.
Sounded like doom and gloom from the Bank of England today but my portfolio then increased in value. However because of the volatile markets I have sold most of my shares and put it into mainly global ETF’s.
unless mortgage rates hit 15% then I know I can get a better return on my money in the market rather than paying down my mortgage 
Bull Market 