During the first half of 2018 economists have speculated that interest rates will rise in line with an improving economic picture, stability in wage growth, a strengthening pound and growing consumer confidence. However, the Bank of England’s Monetary Policy Committee held rates at 0.5 per cent in May, as a softening economic outlook and a GDP slowdown prevented an immediate rate rise.
The mid-term forecast is that interest rates will rise in 2018, expecting to normalise at 1 per cent. Despite some shock to the economy, Bank of England governor, Mark Carney, remains confident that the UK economy is on a strong course: “The underlying pace of growth remains more resilient than the headline data suggest.”
The Bank of England’s Monetary Policy Committee voted seven votes to two in favour of keeping rates held at 0.5 per cent, as growth forecasts for 2018 are cut from 1.8 per cent to 1.4 per cent. First quarter GDP growth was near-stagnant at just 0.1 per cent.
Economists suggest that the Monetary Policy Committee want some consistent signs that the UK economy is trending in the right direction before voting in favour of rate rises.
For UK households, historically low interest rates are helping to keep borrowing costs low. The indications are that interest rates will be rising within the next couple of months, perhaps initially to 0.75 per cent. For those on tracker mortgages or on a standard variable rate mortgage, this means an increase in monthly payments. At Visionary Finance, we can help appraise your finances and lock in low monthly payments on a range of competitive fixed-rate deals. Call us on 01908 465 100 for more details.