You are here: Home - Mortgages - Buy To Let - News -

Interest rates unlikely to rise before 2019, finds BBC economist survey

0
Written by:
04/09/2017
Interest rates are unlikely this year or next, according to a BBC survey of leading economists.

 

This is in spite of CPI inflation running ahead of the Bank of England’s 2% target. Inflation sat at 2.6% in July, against analyst forecasts of 2.7%. Retail price inflation was higher at 3.6%, meaning hefty retail price rises.

Half the economists surveyed said they thought wage growth would outpace inflation in the first half of 2019. They believe the Bank of England is unlikely to raise rates during the Brexit negotiations.

Last week, the minutes of the Monetary Policy Committee meeting showed just one MPC member, Michael Saunders, recommending a ‘modest’ rise in rates to curb inflation. In June, three members had voted for a rate rise. Mark Carney has consistently said that now is not the time for a rate rise.

The base rate has stood at a record low of 0.25% since August 2016 – the first move since March 2009, when it was reduced to 0.5%.

Charlotte Nelson, finance expert at moneyfacts.co.uk, said that even if rates rose, the impact on borrowers would be minimal: “A small increase of 0.25% will have a relatively small impact on interest repayments. (Our research) shows that even those sitting on the average Standard Variable Rate (SVR) of 4.60% will see an increase of just £17 in the first instance. This will of course be dependent on where a borrower is in their mortgage journey, with those closer to being mortgage-free likely to see even less of an effect with a 0.25% increase, as they will have already repaid a significant proportion back to the lender.”

However, she adds that when it does happen, mortgage lenders are more likely to pass on rate rises in full, whereas they have not always passed on cuts in the Bank Base Rate. She added: “Data from moneyfacts.co.uk shows that when Base Rate was cut on 4 August 2016, the average two-year variable tracker rate stood at 2.14%, while on 1 September it stood just 0.20% lower at 1.94%, showing that the reduction was not fully passed on. Despite this, when Base Rate does eventually rise, it is likely lenders will pass the full force of the rise on to borrower.”

 

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
shutterstock_577245904
Remortgaging for extra cash soars past pre-recession levels

Homeowners are increasingly taking advantage of low mortgage rates by borrowing extra money to redevelop their properties as a lack...

Close