Mortgage News
No base rate hike until 2014 at the earliest, say 55% of brokers
In the latest Mortgage Solutions poll, over half the brokers polled expect Bank Base Rate to stay at 0.5% for another two years to 2014 or longer as the global economic outlook darkens.
A further 34% of brokers expect a hike in 2013, while 11% believe a move will happen next year.
Ray Boulger, senior technical manager at John Charcol insists that the Bank Base Rate will not move next year because of the turmoil in the eurozone.
He said: “The rate will stay at 0.5% because with all the problems in the eurozone, the timescale for the next Bank Base Rate increase is getting extended all the time. The main prop for house prices is going to be that low interest rates are going to continue.
“The Bank of England will need to be convinced that the UK recovery is gaining momentum before it starts to contemplate raising interest rates. I think base rate will stay at 0.5% at least until the end of 2013 and quite possibly into 2014.”
Gary Styles, strategy, risk and economics director at Hometrack added that as long as the euro crisis limps along, rates won’t move.
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“A few weeks ago the European Commission published its forecasts which showed Eurozone growth of only 0.5% in 2012, a huge downwards revision from the 1.8% forecast published in May. This will have a direct impact on the outlook for the UK economy.
“The UK is currently expected to grow by around 1-1.2% in 2012 and the latest revisions in Europe will only push this down further and make another recession a possibility.
“This will make it even more likely that interest rates will stay lower for longer and if anything the Bank of England may consider a modest easing to 0.25% during the course of 2012. I don’t expect Bank Base Rate to move until at least Q4 2013.”