Interested in Interest rates?

Despite the weather-affected first few months, the UK economy is now expanding resiliently, and the employment market remains strong although some might argue that the latter is a false picture, buoyed by the increase in part time working and zero hours contracts, allied to the steady reduction in unemployment payments.

Either way, the MPC saw the opportunity it needed to raise interest rates. Whilst the first quarter might have been a dilemma for the MPC, because inflation was high yet growth was weak, the only question this time around was whether the inflation outlook justified a hike. Clearly the MPC felt it did. But as for the timing, cynics might argue that Parliament's summer recess, the void in the City as most dealers and staff are on holiday, and the 'silly season' in Newsrooms was the ideal time to start to upward movement.

So, will higher rates affect the economy? Unlikely. Interest rates are low by historical standards and in recent years, consumers have been switching their borrowing to fixed rate loans. Some 93% of new mortgages are fixed rate, according to the Bank of England’s latest figures. In addition, 65% of loans outstanding are fixed, twice the figure of a few years ago.

That said, the house price outlook across the United Kingdom is mixed. In London, prices are falling, and look set to continue to do so, and the weakness is rippling out to the rest of the South East. Elsewhere, prices seem to be accelerating again. Much of this is to do with affordability and the reduction in foriegn investment, allied with the clampdown on Buy to Let (is it worth it anymore?); and then there's Brexit.....

More to come? Probably not until there is clarity on the deal as we leave the EU.