Chief Economist Andrew Haldane of the Bank of England quashes chances of interest rate rises soon, reducing concerns for those with loans or looking to borrow.
UK is the fastest growing economy in the G7 group of nations this year but lack of wage growth and decreasing affordability has prompted the Bank of England to keep the cost of borrowing low and encourage continued economic growth.
Our current peculiar state of economic ‘agony and ecstasy’; enjoying favourable economic growth, reducing unemployment and low inflation, whilst encumbered by low real wage growth and low productivity.
Back in August Ian McCafferty and Martin Weale of the Bank of England’s monetary policy committee commented a rise in interest rates was due, causing speculation of a change perhaps in November 2014 or February 2015. The latest revised stance from the Bank of England suggests “…interest rates could remain lower for longer…” according to Mr Haldane2. The new anticipated time for a rate rise is August 2015.
Interestingly this means interest rates are likely to be held for an entire parliament for the first time since 1945-1950 when it was held at 2%.
Once the rates do begin to rise, a time which could continue to be pushed back, the increases in the rate are likely to be gradual and cautious, with the aim to eventually return to a lower normal level of around 2 to 3 percent.
Continuing through the remainder of 2014 and well into 2015 with this historically low rate should show in the property market with an increase to confidence of buyers and an improved feeling of liberty for those wishing to move home or build homes.