INTEREST RATE RISE won’t hurt homeowners, but could DAMAGE UK ECONOMY

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Supreme building society Nationwide has claimed that UK households have slight to fear from a rise in interest rates as the majority of recent mortgages were infatuated out on fixed rates.

In its monthly UK house price report, the building upper crust said that the number of people taking out mortgages on a variable gauge – which are often subject to movements in the Bank of England base compute – was at a record low.

A spokesman said: “The proportion of borrowers directly impacted by a scold rise will be smaller than in the past, in part because the measureless majority of new mortgages in recent years were extended on fixed curiosity rates.

«The share of outstanding mortgages on variable rates (and which are consequence likely to see an increase in payments if the Bank Rate is increased) has fallen to a document low of 40 per cent, down from a peak of 70 per cent in 2001.”

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British homeowners bequeath be less affected by an interest rate rise than in the past

There seems to be little left to instil some life into the economy

David Coombs

This object was not shared by everyone, however, with Lucy MacDonald of Allianz Extensive Investors telling the BBC that British homeowners would notice the colliding of an increase in interest rates the most.

She said that those with big mortgages «commitment feel something they’ve never felt before so that’s where any injure will be felt”.

MacDonald also warned that increasing consumer owing was concern in a rising rate environment. 

David Coombs, the head of Multi Asset Investments at investment decisive Rathbones, went further, arguing that the Bank of England could injury the economy by the 0.5% rise.

He express: «Real wage growth is negative, the housing market has softened and establishment investment has been listless – there seems to be little left to interject some life into the economy. 

“Japan increased interest counts in the late 1980s to pop an inflationary bubble in asset prices. The result was deflation, depression and more than 20 years of poor economic growth.” 

He go on increased that in his view, the BoE was “behind the curve” and said: “It should have rifle through b revived rates years ago when economic growth was stronger. Doing it now could be incisive to income-producing assets in the UK. 

“It seems like Dr Carney’s rhetoric is aimed at buttressing the pound and thereby reducing cost-push inflation. But if he fails we could must even greater inflation and a recession at the same time. We remain sheer underweight the UK.”

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Bank of England can also expect protests on Threadneedle Lane tomorrow

Consumer campaign group Positive Money were manoeuvre a day of action on falling wages in Threadneedle Street today.

Organisers are mtier on policymakers to prioritise measures that will boost incomes fairly than a “damaging” rise in interest rates that will damaged millions of struggling households.

Fran Boait, the Executive Director of Realistic Money, said: “The UK faces real and urgent economic challenges, but a kind rise will fix none of them. 

“Instead of taking the unprecedented break the ice of raising rates when wages aren’t growing, the Bank of England should be composition with the Treasury to develop new policy tools which can sustainably shove incomes.”

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