June 14th, 2016
A strategist at leading investment bank UBS has suggested that interest rates could remain low, or drop further still, for the next four years.
Projections on financial markets show that the Bank of England’s Base Rate is not now expected to reach 0.75% until mid-2020, with rates potentially cut further towards zero to boost the UK economy in light of the uncertainty around a Brexit.
The Bank’s Base Rate of interest has remained at 0.5% since the middle of the recession in March 2009. If this week’s projections bear fruit, it would mean more than a decade at its current historic low.
John Wraith, strategist at UBS, suggested it “would become highly likely that at some point the Bank of England would have to respond by cutting rates further still” should the nation’s economy relapse.
It all adds up to an uncertain time for those with savings or liabilities, notably mortgages, amidst what may happen should Britain decide to leave the European Union.
Bank of England Governor Mark Carney had controversially suggested last month that a vote to leave the EU could trigger a fresh recession, with the value of sterling set to plummet.
“Understandably, people are concerned about the impact of June 23rd’s referendum,” said Andy McBride, Business Development Director at Contractor Mortgages Made Easy. “It doesn’t help that both sides of the argument appear to resort to scaremongering tactics to try to win votes”
“People need some clarity on what real impact a Brexit could have to them, in order to make what is a very, very important decision on June 23rd.”
Potential impacts of a vote to leave the EU have ranged from a housing crash to the recession suggested by Governor Carney, however, the uncertainty of just what the impact could be is a concern in itself.
“Simply put, best estimates are just that; estimates” said McBride. “Whilst we can predict some basic changes that would happen, such as having to renegotiate trade deals, what the new terms would be is anyone’s guess. For all the potential downsides; what about the potential advantages?”
“There is little chance of London being dislodged as the financial capital of Europe, with a large network of financial and professional services that would be near impossible to replicate elsewhere. Immigration is a concern for many, particularly in the current climate of such a housing shortage in the country”
Thankfully, with the financial firepower that Contractor Mortgages Made Easy now hold, the mortgage market for contractors is at least a little less uncertain.
“We pioneered bespoke underwriting for Contractors, and regardless of the result of June 23rd’s referendum, we will continue to work with lenders to ensure that our clients are not disadvantaged, and that savings can still be made.”
Article By: Jon Hatfield, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Ratchelle Deary, Public Relations Manager
Tel: 01489 555 080
Email: ratchelle.deary@contractormortgagesuk.com