There are more Bank of England base rates to come, a group of property finance industry experts has warned.
Personal finance comparison site Finder compiled an expert panel consisting of 11 academics, economists, mortgage and savings experts, and asked them for their predictions and opinions on the future of the Bank of England’s base rate and the impact of this on the UK economy.
Five of the 11 experts predict that the base rate will sit at 4.25 per cent by the end of 2023, and two out of 11 believe it will end the year at 4.5 per cent.
Another two panellists believe the rate will stay at its current 4.0 per cent and the last two panellists predict that there will be an even more significant increase to 5.0 and 5.5 per cent by the end of 2023.
None of the panellists believe the rate will fall from its current level of 4.0 per cent although two of the experts believe this will be the rate come the end of the year.
When asked if the bank should be dovish - that is, lower rates to encourage growth and borrowing - six of the panellists said this would be their approach.
David Hollingsworth, associate director at L&C Mortgages, said: “Reaching the peak of rate rises sooner rather than later should help borrowers adjust to the new rate environment and how it impacts them.”
Luciano Rispoli, senior lecturer at the University of Surrey, said: “The large inflationary shock experienced in 2022 can only be counteracted by aggressive hawkish BoE monetary policy actions. Thus, I believe MPC actions can only go [in] one direction.”
And Stephen Sillars, savings editor at Chip, said: “The UK needs to get a handle on inflation so it’s not really in a position to stop raising interest rates, but the Bank of England can’t ignore the fact this may push the economy into more of a downturn than already predicted. It’s a delicate balance.”