United Trust Bank

Nine out of 10 brokers predict base rate rise

More than Nine nine out of ten 10 property and asset finance intermediaries (92%) believe that the Bank of England will increase the base rate this year, according to a new survey.

Research carried out by United Trust Bank found that just 7% of respondents believed that the base rate would remain unchanged throughout 2018, while 1% predicted that it would fall.

Harley Kagan, group managing director at United Trust Bank (pictured above), said: “Since November 2017 when the base rate was increased, speculation about when the next move would come has been rife.

“However, although there seems to be expectation that an increase could come as early as May, there are several factors which might cause the Monetary Policy Committee (MPC) to show more caution. 

“For example, the Term Funding Scheme ended in February.

“This provided below market cost liquidity to banks in order to encourage lending to the public and its removal may already be having an impact on saving and lending rates.

“In addition, the Bank of England has so far assumed a relatively smooth path to Brexit, but with substantial divisions within parliament, and within the Conservative party itself, Theresa May is unlikely to find it easy to guide through her preferred Brexit based on a fragile majority.”

Some 72% of brokers said that they believed Theresa May would still be prime minister by the end of the year.

“Indeed, more than a quarter of brokers [28%] believe she may not be the PM presiding over the actual Brexit at all,” added Harley.

“With so much uncertainty still surrounding what the UK’s economic and trading position will look like come April 2019, there’s a strong argument for leaving rates alone until the outlook becomes clearer.”

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