What is going to happen to interest rates!

8th February 2010

They will go up! Ok, so you knew that already.  The question is when will they go up and by how much?  That unfortunately is a much trickier one to answer.  I have recently been studying numerous different opinions and have come to three conclusions!

There is no common agreement as to what will happen, nor should there be as the reality is no one actually knows.  No one knew they would drop like they did and no one knows exactly how they will recover.

The experts (go to http://downhambrothers.ning.com/profiles/blogs/downloadable-pdf-with-interest  to download the 3 page summary) believe that by the end of 2011 interest rates will be between 1.5% and 3.5% (a fairly significant 2% margin) and they broadly agree that rates will start to increase at the end of the summer this year.  How quickly rates increase is very much dependent on other variables such as inflation, exchange rates, housing market, unemployment, bank recovery etc.  So many variables in play are the reason that it is impossible to be accurate.

MY GUESS – taken from a recent blog (www.downhambrothers.co.uk)  - Rates start to increase towards the mid / end of 2010 ending the year at 1%.

2011 sees gradual increase at quarter of a percent intervals ending the year at approximately 2.5%

2012 (now I really am having a stab in the dark!) so long as inflation does not run away (and I think it won't get silly) the rates will end 2012 at about 3.5%

If you want to discuss how interest rate changes might impact on your mortgage or other financial arrangements then please call or email us.