Taken from The Financial Reporter:
Robert Gardner, Nationwide's Chief Economist, says a "near-term rate hike is becoming more likely".
The latest Nationwide house price index notes that "most economists and financial market pricing suggest that a small rise of 0.25% is likely at the MPC’s next meeting in November".
At its September meeting, the Bank of England’s Monetary Policy Committee signalled that, if the economy evolves broadly in line with its expectations, an interest rate increase is likely in the months ahead.
Gardner said: “We would expect a modest rise in Bank Rate, by itself, to have only a modest impact on economic activity. Indeed, if rates are raised to 0.5%, monetary policy settings will still be a little more supportive than they were before Bank Rate was lowered to 0.25% in August 2016.
“This is because the MPC is unlikely to reverse the other measures it put in place last year to support credit availability in the wider economy (such as the additional purchases of government and corporate bonds, which have helped to keep longer term borrowing costs low). Moreover, the MPC has signalled that it expects any increase in interest rates to be gradual and limited. Indeed, financial market pricing suggests that Bank Rate is only likely to rise by around one percentage point (to 1.25%) over the next five years."
The index also shows that annual house price growth remained stable at 2.0% in September, however London became the weakest performing region for first time since 2005, with house prices down 0.6% year-on-year.
Alex Gosling, CEO of online estate agents HouseSimple, commented: "The London property market has enjoyed almost a decade of phenomenal growth. But year after year of double digit growth was unsustainable and inevitably going to come to an end at some point. That point looks like now.
"The Government's reform of the stamp duty bands and the introduction of a second home stamp duty surcharge have hit the London housing market more than any other region.
"Brexit fears are also scaring off overseas investors who came to the rescue and supported the London market during the dark years after the financial crash.
"The London market has caught a cold, and in all honesty, there won't be too many people sympathising.
"Prices in the Capital are out of reach for all but the privileged few, and the Bank of Mum and Dad has had to make some pretty sizeable withdrawals in the last few years to help young buyers climb onto the property ladder.
"Many Londoners will actually be hoping that house prices continue to fall until they reach an affordable level. Their wish may well come true."
Robert Gardner, Nationwide's Chief Economist, says a "near-term rate hike is becoming more likely".
The latest Nationwide house price index notes that "most economists and financial market pricing suggest that a small rise of 0.25% is likely at the MPC’s next meeting in November".
At its September meeting, the Bank of England’s Monetary Policy Committee signalled that, if the economy evolves broadly in line with its expectations, an interest rate increase is likely in the months ahead.
Gardner said: “We would expect a modest rise in Bank Rate, by itself, to have only a modest impact on economic activity. Indeed, if rates are raised to 0.5%, monetary policy settings will still be a little more supportive than they were before Bank Rate was lowered to 0.25% in August 2016.
“This is because the MPC is unlikely to reverse the other measures it put in place last year to support credit availability in the wider economy (such as the additional purchases of government and corporate bonds, which have helped to keep longer term borrowing costs low). Moreover, the MPC has signalled that it expects any increase in interest rates to be gradual and limited. Indeed, financial market pricing suggests that Bank Rate is only likely to rise by around one percentage point (to 1.25%) over the next five years."
The index also shows that annual house price growth remained stable at 2.0% in September, however London became the weakest performing region for first time since 2005, with house prices down 0.6% year-on-year.
Alex Gosling, CEO of online estate agents HouseSimple, commented: "The London property market has enjoyed almost a decade of phenomenal growth. But year after year of double digit growth was unsustainable and inevitably going to come to an end at some point. That point looks like now.
"The Government's reform of the stamp duty bands and the introduction of a second home stamp duty surcharge have hit the London housing market more than any other region.
"Brexit fears are also scaring off overseas investors who came to the rescue and supported the London market during the dark years after the financial crash.
"The London market has caught a cold, and in all honesty, there won't be too many people sympathising.
"Prices in the Capital are out of reach for all but the privileged few, and the Bank of Mum and Dad has had to make some pretty sizeable withdrawals in the last few years to help young buyers climb onto the property ladder.
"Many Londoners will actually be hoping that house prices continue to fall until they reach an affordable level. Their wish may well come true."
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