Here we are again at the start of a new year and many will be wondering what’s in store for us in 2023?

With so many recent disruptive events shaping our lives at an unprecedented rate, it sometimes feels like we are on a hypersonic fairground roller coaster lunging at breakneck speed from one earth shattering crisis to another!

Take the past 12 months for example. We experienced the sad loss of the Queen and the accession to the throne of King Charles. Within the space of a few short months, we’ve had 2 monarchs, 3 prime ministers, 4 chancellors and the 5th foreign secretary taking office in just 5 years!

During 2022 we also witnessed the outbreak of the largest war seen in Europe for 77 years with untold consequences on many lives and massive disruption to critical infrastructure and supply chains ranging from harvesting and the shipment of wheat to the distribution of oil and gas.

Energy costs were already rising and the war in Ukraine exacerbated the situation by pushing up fuel prices to giddying heights. Thankfully, fuel prices have settled down in recent weeks but the market still remains volatile.

Rising energy costs have a knock-on effect on the price of manufacture and distribution of the products or services we’ve come to rely upon. Consequently, we are now currently living with inflation levels not seen for around 40 years. Inevitably and sadly, it seems the only means open to the Bank of England to control inflation (which they are responsible for), is with interest rates.

Last August the Bank of England raised interest rates by 0.5% to 1.75%, the biggest jump in 27 years.

And the question that many of us are asking is; where are interest rates heading?

From the numerous press articles on the subject and conducting a quick Google search, the consensus is that inflation is likely to fall with a corresponding drop in interest rates during 2024. Until then the bank base rate could rise to 4.6% by July this year. And, that could see 2 year fixed mortgage rates remaining at well over 5%

Capital Economics stated in December that a steady fall in inflation will allow the central bank to make cuts to the base rate in 2024, with reductions which will be sharper than projected.

In truth, nobody really knows the future of interest rates.

As we move closer to becoming a society ever more reliant on technology, we thought it might be fun to pose the interest rate question to an online Artificial Intelligence app challenging it to come up with a sensible answer to that big and elusive question.

We typed the following question into ChatGPT a brand-new app that’s getting a lot of media attention right now to see what it came up with.

Question: “What is the future of interest rates in the UK during 2023?”

This was the answer ‘it’ came up with:

‘These objectives can vary depending on the state of the economy and can change as economic conditions evolve.

It is not possible for me to accurately predict future interest rates as they are influenced by a variety of economic and financial factors that can change over time. Interest rates are set by central banks, such as the Bank of England in the UK, and are used to help achieve their monetary policy objectives.

In the UK, the Bank of England sets the interest rate for the country based on its assessment of the economic conditions and its objectives for inflation and employment. The Bank of England’s Monetary Policy Committee (MPC) meets regularly to review economic conditions and decide on the appropriate interest rate.

It is important to keep in mind that interest rates can fluctuate and are subject to change at any time. It is always a good idea to stay informed about economic conditions and developments that may impact interest rates to make the best financial decisions for your situation.’

Not bad for a piece of tech but despite the ability of ChatGPT to perform the most incredible tasks with mind numbing speed, accuracy and fluency it couldn’t really shed any more of a definitive answer on that big question than a good old fashion plain speaking human could!

However, watch this space as there’s no doubt that AI apps like ChatGPT are going to play an ever more important role in providing increasingly accurate answers and predictions as they self-learn from the data being added and stored on their servers. AI will most certainly have a major impact on all our lives going forward.

Meanwhile, and back to reality, we at Buckingham James continue to advise our clients using our best human instincts on how interest rate movements could affect their mortgage costs.

We have access to real time mortgage intelligence and that gives us the ability to advise you on the type of mortgage or remortgage arrangements available to match your needs.

With many fixed rate mortgages coming to an end this year, contact us now and let us help put a little more certainty with your mortgage costs back into your life.