A leading economic research consultancy has warned that mortgage rates are set to rise, putting a brake on house price inflation.
According to expert’s mortgage rates are set move back above 3% by the end of the year.
Economists have suggested that the first interest rate increase for a decade could come as early as November after the Bank of England warned a hike was likely in the coming months if the economy evolves broadly in line with its expectations. Thus, Interest rates could rise by the end of 2019 to an expected 1.75%.
Accordingly, it seems almost certain that mortgage interest rates are now approaching a turning point. It would seem that sound advice for expats with a mortgage is to review it as soon as possible to ensure it meets future demands.
Higher borrowing costs will represent a major change for the housing market, mortgage interest rates will without doubt increase as they are doing slowly at present. Despite the inevitable rise in mortgage rates, it is unlikely that to trigger another downturn in house prices as supply and demand seem to rule the day.
It is very clear, much will depend on how the economy evolves, but most economists and financial market pricing suggest that a small rise of 0.25% is likely at the Monetary Policy Committee’s next meeting in November, which would take Bank Rate to 0.5%.
A modest rise in the Bank Rate, by itself, will have only a modest impact on economic activity. Indeed, if rates are raised to 0.5%, monetary policy settings will still be a little more supportive than they were before Bank Rate was lowered to 0.25% in August 2016.
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