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UK INTEREST RATES AND THE SHADOW OF BREXIT

Will there be a house price crash?

As the UK’s departure from the EU grows ever nearer, experts are predicting that the Bank of England is unlikely to raise interest rates again this year.

Policymakers may adopt a ‘wait-and-see’ attitude. Once the terms of the deal become apparent, and a picture emerges of what a post-Brexit economy might look like, they will no doubt take stock and consider how best to steer the economy through the transition phase.

Some market-watchers believe that May next year looks like the first available opportunity to raise rates to 1%, and even then, this will depend on key economic data such as inflation and unemployment figures.

Contrary news flow predicts a February rise, based on stronger than expected economic growth. Data from the International Monetary Fund shows the UK economy is currently performing at above its long-term average growth potential.

Although the continuing low level of interest rates is not good news for savers, mortgage holders and those hoping to get on the housing ladder look set to benefit for the remainder of the year.

Image published in Financial Times, https://www.ft.com/content/64bfa47e-f259-11e8-9623-d7f9881e729f Wednesday 28th November 2018