When will the increase in the base rate of the Bank of England?

The housing market in the UK, which is largely directly linked to the mortgage market, is highly dependent on the base interest rate of the Bank of England. Today, the base interest rate is at its historical minimum of 0, 5 %. However, more often heard concerns of market participants about the fact that it will certainly be raised in the coming months.

Indeed, so low interest rate, including the reason of the price growth for residential property.

Speculation of rising interest rates that appeared at the end of March 2014, already slightly cooled stir in the real estate market.

Britain now stands on the threshold of parliamentary elections in the spring of 2015. It is not obvious that the government will take unpopular measures to raise rates before the election. However, given the prospect of too rapid growth of prices for residential property, which is particularly sensitive in the lower sector of the market, it is possible that the Bank of England will begin this process later this year.

The majority of lenders in the UK expects to increase base rates no later than 1 quarter of 2015. It is also expected that a greater impact of the increase in base interest rates will have on existing homeowners, rather than those who are only going to buy their first home. However, people’s opinions were divided, more accurate the relative time period when you can reap a rate hike. Approximately 36% of mortgage brokers in the UK believes the Bank of England will increase rates before the end of this year.

The unanimity of the creditors that the growth rates will occur at the latest during the first quarter of 2015. With this statement agree 72% of the respondents. Among those who believe that increasing the base rate of the Bank of England will happen in the next year, also, there is no unanimous opinion. 44% of respondents believe that the increase happens in the first half of 2015, and 20% of respondents do believe that the current base rate of 0.5% will survive the middle of next year and will be increased no earlier than the second half of 2015.

® Alice Morgan 11. 08. 2014

New South Quarter

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