- 07
- Feb
While the Bank of England decided the leave rates at 5.75% during their last meeting, further warnings of global economic turmoil are increasing speculation among financial experts that interest rates may well start to come down soon.
There is a growing consensus amongst economists that interest rates have now peaked. This prediction was further strengthened with a comment the BoE recently released.
One of the biggest reasons the rate rises have had such a large impact is that bank to bank lending is at its highest level in almost a decade. The amount of bank to bank lending depends on the rate banks charge each other for lending which now stands at 6.88%.
This financial turbulence is beginning to be felt by households also result out for the last quarter show that house price inflation was down to 1.6%. The cost of borrowing has gone up considerably in recent months, putting many of us off looking for a new home. Anyone struggling with their home loan repayments should be relieved to hear news that interest rates are not going up again.
Despite the high interest rates, inflation is expected to persist in all areas of the economy. The poor weather last summer meant that harvests were down, which explains the price increase for many goods in your local super market. With fuel costs also at their highest ever rates, it’s no wonder that households are having to borrow money to make ends meet.
While inflation in the housing sector has come down in recent months, house prices are not expected to start falling because of a general shortage of housing across the country and strong employment figures.
