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No Base Rate rise this year say majority of brokers – UTB

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  • 18/08/2017
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No Base Rate rise this year say majority of brokers – UTB
A mortgage broker poll confirmed 76% think there will be no increase to the Bank of England Base Rate, this year as mortgage lenders continue to compete hard on rates.

CACI data suggests product transfers and remortgage activity levels will rise considerably with £130bn of product cessations due in the next six months and a further £220bn next year.

This business stream will be helped along as lenders compete among themselves for this business by the results of a poll suggesting just 21% of asset and property finance brokers expect a Base Rate rise this year.

This month, the Bank of England’s Monetary Policy Committee (MPC) voted 6-2 in favour of keeping the Base Rate at 0.25%. Bank rate has been at 0.25% for 12 months since the sudden cut after the EU referendum.

And a report by Oxford Economics also predicted there would be no Base Rate rise until 2019, while house prices were expected to stagnate until 2021.

 

Residential market outlook

Brokers were also polled on their views on the outlook for the UK residential property market and 28% said they had a neutral view of the outlook against 26% who felt it was positive and 10% negative.

Harley Kagan, group managing director of United Trust Bank, (pictured) said: “The Bank of England has lowered its growth forecasts to 1.7% for this year and 1.6% for next and inflation is currently running at 2.6%. Interest rate increases, when they come, are likely to be by small increments and over several months, if not years.”

He added that financial markets suggest a rise in interest rates will come only towards the third quarter of 2018.

“This is unwelcome news for savers but borrowers, be they businesses or individuals, will be relieved that the cost of credit is unlikely to increase drastically or suddenly,” Kagan continued.

“This should encourage SMEs to keep looking out for opportunities to invest and grow their businesses and developers to keep contributing to the many hundreds of thousands of new homes which the UK needs to build.

“With the uncertainty of Brexit adding to the complexity of challenges faced by the UK economy, Mark Carney will be mindful of doing anything which might stall an economy which is still very much finding its feet 10 years on from the start of the credit crisis,” he added.

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