News - Economics / markets
Mortgage Solutions | 25 Mar 2011 | 09:27
In an exclusive Mortgage Solutions TV panel debate, industry experts agreed a May rate rise is less likely following the Budget and the unchanged voting pattern revealed by the Monetary Policy Committee.
AMI director Robert Sinclair, Tenet Lime managing director Gemma Harle and Private Finance director Melanie Bien agreed the MPC Minutes the morning of the Budget and the Chancellor's prediction inflation would remain up at between 4 to 5% this year make a rise within the next two months less likely.
Sinclair said the Office for Budget Responsibility's (OBR) revised projections for GDP growth for 2011-12 down to 1.7% from 2.1% meant tax take will also be lower than hoped.
"As such, any rate rises could stifle the economy and are less likely to happen because any stop on the economy could increase the danger of a double dip, which would be catastrophic," said Sinclair.
"That's the real juggling act that follows now," he added.
Harle agreed, adding: "Hopes of a rate rise are largely wishful thinking on the broker front."
Bien predicted the first rate move in "September at the earliest."
Robert Sinclair suggested there might be a vague chance of a move in July, but agreed with Bien September was more likely and then probably just 0.25% basis points.
Bien said: "Because we've had it so low for so long, rates won't need to rise by much to have an impact. Actually, just by starting to rise, rates should affect the market."
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Recent comments
I agree with the pundits but there is the additional factor of increasing worldwide unrest. This could have further adverse impacts on commodity prices. Any early rate rise could reverse the current weak growth trends. We must focus on stimulating the housing market rather than worrying too much about an increasing remortgage market.
Charles Haresnape
25 Mar 2011 | 10:30
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You raise interest rates to curb borrowing at a time when the cost of money is causing a rise in the price of goods and services. There is no evidence that borrowing is increasing (far to the contrary looking at the current mortgage market) and causing inflationary pressures. We simply have to adjust to increased costs for fuel and other essentials. Austerity comes in many forms!
John
25 Mar 2011 | 11:02
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