will interest rates go up or down over the next two years?

I am wondering the same thing. My fixed rate mortgage is ending soon and I want to know if I should go for another fixed or variable this time. Also wondering if I should just sell and get out altogether (its an investment not a home for me). Lots of news stories are suggesting that the rates have peaked but I read others which talk of huge inflationary pressure in the coming years...Any insights from the financial gurus would be appreciated.And yes I know this is nothing to do with consulting!

Up, but I don’t think house prices in London are going to fall by much, even if the rest of the country halves in value.

Up up up. And inflation will rise too. We have been living off debt for far too long. Now it has to be paid back.Also, house prices in London will rise relative to the rest of the country because this is where all the work is. A 3 bed in Kent simply ain't worth the same as a 3 bed in London, despite what the estate agents would have us believe.Disclaimer: The above are my opinions only.

I hope there's a massive property crash so I can slip in there and pick u a penthouse before it rockets again. (wishfully thinks) Any day now, any day......

why is everyone so sure they'll rise? I mean what will the driver for this be? I'm not a finance specialsit or banker, but if interest rates progressively increase, will that not cause further problems in the credit market. I thinking particularly of the sub prime market, and of those who've taken out over leveraged mortgages (5 times salary or more). The last thing the govt/banks/us need, are widespread defaults, causing further pressure on banks. I mean, can you imagine if a really big player, got into the problems the Northern Rock has?To be honest, i'd expect mortgages to be far harder to come, as banks refuse to lend so freely. That being the case would not a rate fall become more likely?as i said, not remotely an expert, so ready to be corrected on this

higher interest rates and higher inflation? do you understand the relationship between the two?

Yes, I do. But you clearly don't. I'm referring to a movement OF the Phillips curve, not a movement ALONG it.

anon,right. you know your stuff. if your mortgage deal was running out this month and you were faced with the choice of a fixed or variable deal as your two options, which would you go for?

The only reason Northern Rock got in trouble was because of the stupid way they raise their capital and people panicking. Northern Rock borrow money in short term loans (like 3 month) and loan it out in long term loans. This means that they have to keep borrowing money from the money markets to pay back the other short term loans they have, so when the market became more viscous and it became harder to get the cash they need they had to borrow off the B of E. A stupid business model I know, but it has worked well for the past decade or so. Northern Rock get 80% of their money this way, the other 20% coming from the public getting saving accounts. The silly people in this population let the panic of others affect them and everyone rushed to the bank, when it was obvious that the government would never let this bank go down. If I was a gambling man I would have put a large proportion of my savings into A&L shares last night (they fell about 30% last night I think) as I’d imagine that they’ve risen dramatically this morning. Although I haven’t checked. Edit: As far as I know, the other big banks don’t raise their money in the same way, so should all be fine.

Steady for the time being and then heading downwards. This has been reported on the BBC news website today:"The Consumer Prices Index (CPI) fell to 1.8% in August - its lowest level in more than a year - from 1.9% in July. The rate is below the government's 2% target, and the fall is likely to add to expectations that UK interest rates have peaked."..."We expect the Bank of England to remain firmly in 'wait and see' mode for the time being, although we do anticipate that the next move in interest rates will be downwards," said Howard Archer at Global Insight...