Brokers expect 2014 rate rise

Sarah Davidson

August 7, 2014

However, just 17% of lenders anticipate a hike with 72% of them expecting an increase in the first half of 2015.

Opinion amongst mortgage brokers are more split, as 44% anticipate a rate rise in the first half of 2015, while one in five (20%) expect the current 0.5% rate to survive until the second half of next year.

Peter Williams, executive director for IMLA, said: “The prospect of a rise in interest rates has been looming on the horizon for some time, but now it appears an increase is hovering closely overhead.

“The majority view across the mortgage industry is that a rise in 2015 still looks to be the most likely outcome. But it won’t be long before the consensus is challenged within the MPC, and speculation over an early rise has clearly registered with a significant number of brokers.”

Most lenders (56%) think existing homeowners will be the most affected, followed by aspiring first-time buyers (28%). However just 11% of lenders think recent first-time buyers will be affected.

Brokers meanwhile expect recent first-time buyer and current homeowners to take the brunt of a rate rise, ahead of aspiring first-time buyers.

Williams added: “It’s important to remember that the first rate rise in more than five – or potentially even six – years will seem like a momentous occasion when it arrives, but the size of increase is likely to be very modest, certainly to begin with.

“The Bank is firmly focused on cautious steps that will preserve the recovery and will guard against punishing existing borrowers.”

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