Over a fifth of brokers operating in the bridging, development finance and asset finance sectors expect to see an increase to the base interest rate by the end of this year.
<
div>Over a fifth of brokers operating in the bridging, development finance and asset finance sectors expect to see an increase to the base interest rate by the end of this year.
In a recent survey carried out amongst brokers by United Trust Bank, 22 per cent of respondents think that the Bank of England will start to increase interest rates by the end of 2014.
However, a further 51 per cent think that a rate rise by mid-2015 was most likely. A slim 19 per cent predicted that the first interest rate rise would come into place by the second half of 2015. The remaining eight per cent suggested Mark Carney wouldn’t touch interest rates until 2016 or later.
When asked at what level brokers expected the Bank of England base rate to settle at within the next three years, the vast majority, 87 per cent, suggested it would settle at around 2-3 per cent.
When the Bank of England base rate starts to rise, at what level do you expect it to settle within the next three years?
|
Level at which base rate will settle |
% of broker predictions |
|
Around 1% |
9% |
|
Around 2% |
42% |
|
Around 3% |
45% |
|
Around 4% |
3% |
|
Around 5% |
1% |
Harley Kagan, Managing Director of United Trust Bank, commented: “One of Mark Carney’s targets for starting to increase interest rates, that of seeing unemployment fall to seven per cent or lower, was surpassed earlier in the year and the rate of unemployment now stands at around 6.5 per cent.
“However, Mr Carney and the Monetary Policy Committee will be acutely aware of the significance of an interest rate rise after the base rate has been held at such a low level for such a long time and they will want to be absolutely assured that the economic recovery is strong enough to withstand any shockwaves this will send out. Some businesses and individuals will have taken advantage of the low interest rate and increased their borrowings and the Bank of England will not want to place undue pressure on pockets and P&Ls if it believes it could jeopardise continued growth."
Leave a comment