A new economic forecast for the remainder of this year has suggested that the base interest rate will go down before the end of 2023, but that it will be raised again by the Bank of England (BoE) before then.
This prediction comes from the spring forecast published by the EY Item Club. In this, it states that it expects the base rate to be increased to 4.5% by the BoE at some point in the spring, but that it would be reduced during the winter and that it would then go on falling over the course of next year.
The EY Item Club chief economic advisor, Martin Beck, told Mortgage Solutions that:
“Despite challenges in the global banking sector and falling inflation, another rate rise at May’s Monetary Policy Committee meeting is probably more likely than not following a better-than-expected economic performance.”
Beck then went on to say that he was expecting inflation to ease off before the end of this year, but that this could be temporarily delayed due to the fact that the economy was recovering more quickly than anticipated.
The EY Item Club forecast also states that the current fall in the average price of a home across the UK will continue. It suggests that prices could go down by as much as 10% during the rest of this year and next.
Anyone who has CeMAP mortgage advisor training will be aware that a fall in house prices could be beneficial for those looking to buy a home.