Nearly 70% of brokers predict base rate rise by end of 2020
Nearly 70 per cent of mortgage brokers believe that the Bank of England base rate will be higher by the end of 2020, according to a survey by United Trust Bank.
The lender found that 58 per cent of brokers expect to see the base rate change by this time next year and 69 per cent predict an increase by the end of 2020.
While eight per cent of brokers expect a reduction by the end of next year and 23 per cent expect the base rate to remain at 0.75 per cent, almost half expect it to increase to 1 per cent and 12 per cent of brokers expect a bigger increase to 1.25 per cent.
As the search for Mark Carney’s successor continues, brokers were mainly positive about the outgoing governor’s role in managing the central bank.
The survey found 61 per cent of brokers rated Carney’s performance “good” and 25 per cent said he was “average”.
A tenth of brokers said he was “poor” or “terrible”, while 4 per cent deemed his performance “outstanding”.
United Trust Bank group managing director Harley Kagan says: “The base rate has been 0.75 per cent for almost a year and there had been plenty of speculation that we would see another increase by the end of 2019.
“However, the rate of inflation remains under the Bank of England’s 2 per cent target at 1.9 per cent, UK growth for the three months to April 2019 has fallen to 0.3 per cent and with Brexit uncertainty now combined with a new Prime Minister this summer the economic environment calls for a steady monetary policy.
“The Monetary Policy Committee will be wary of stifling growth and consumer spending by increasing interest rates and effectively taking money away from businesses looking to invest and putting more pressure on household budgets already squeezed by low wage growth.
“Although interest rates are unlikely to stay this low forever, consensus appears to be that we will have at least another 12 months with the base rate held at 0.75 per cent.
“Of course, with less than four months until we reach the new Brexit deadline and Government sidetracked by a battle for its leadership, what happens next is anyone’s guess.”
Broker predictions for base rate by end of 2020:
Source: Mortgage Strategy