The vast majority of brokers expect the first interest rate rise to come in 2015 or 2016, according to a new poll carried out by United Trust Bank.
44% of brokers who responded to the survey expected the first interest rate increase to come at some time in 2015 while 36% thought it would be 2016 before the Bank of England put up the cost of borrowing. 10% felt that a rate rise could come as early as next year.
The results of the survey are revealed soon after Bank of England Governor, Mark Carney, suggested that the UK’s unemployment rate has a ‘two in five chance of hitting 7% in 2014’. The Governor has previously said that he intends to leave the borrowing rate on hold at 0.5% until unemployment falls to 7% or less.
The Bank of England also raised its prediction for UK economic growth in 2014 from 2.5% to 2.8% whilst official Government figures released recently also show that unemployment fell to 7.6% in the months leading up to September.
Harley Kagan, managing director of United Trust Bank, said: “Mark Carney’s more upbeat assessment of the state of the UK economy together with the better than expected unemployment figures suggest that Brokers predicting an interest rate rise in 2015 could be right on the money.
“Although the chances of unemployment hitting 7% next year are less than 50/50 it would take an extraordinary turn of events to prompt The Bank of England to increase interest rates in 2014 and risk choking off what appears to be a real hope of economic recovery.
“The Bank of England’s base lending rate has remained unchanged for three and half years but our recently announced lower rates for bridging have certainly caused a stir in the market place. Brokers have seized the opportunity to offer our bespoke short term secured finance to an even wider range of clients in more varied circumstances than ever before.
“As we continue to support the ambitions of developers, brokers and their clients and experience a growing demand for our products and services, the future for the Bank and its broker partners appears very bright indeed.”
