Home Property Finance & InvestmentMortgages UK hits a recession, but what does this mean for interest and mortgage rates

UK hits a recession, but what does this mean for interest and mortgage rates

by LLP Finance Reporter
15th Feb 24 12:45 pm

The latest GDP figures have just been released and show the UK economy contracted in the final three months of 2023.

Gross Domestic Product, or GDP, fell by 0.3% in the last three months of 2023, more than expected.

With the UK technically falling into recession at the end of last year, Newspage asked experts how this could impact mortgage and interest rates?

Andrew Montlake, managain director at Coreco said, “It was no surprise to anyone who is in touch with the mood on the high street that the UK has fallen into a technical recession.

“Whilst shallow, it nonetheless shows how out of touch some of those in positions of power are to the realities of people dealing with higher mortgage and living costs, especially those on the MPC who bizarrely voted for a further increase in interest rates.

“This should serve as a further signal that rates are now too high and a cut should come sooner rather than later.

“This data could put some downward pressure on Swap rates, which would give lenders room to reverse the recent increases we have seen and mark a return to the January sales.

“The Bank of England, however, do not seem like they have the tenacity to lead, and are more likely to wait and follow others.”

Justin Moy, managing director at EHF Mortgages said, “While it is being called a ‘shallow recession’, it still highlights the decline in our economy that needs addressing immediately.

“Mortgage rates have have increased too quickly in a short period of time, and the Bank of England needs to intervene and bring base rate down sooner than planned to stimulate growth, given we are already half way through the first quarter of 2024.

“I would expect SWAP rates to start to fall on this news, which will be good for mortgage borrowers and businesses that are facing hard times financially.

“A boost to the economy only comes from having money in your pockets to spend.”

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