A number of economists are stating that the slowdown in GDP that the UK experienced during the three-month period up to September could make rate reductions possible.
The country enjoyed only the most sluggish GDP growth throughout the third quarter of this year. There was a minimal increase of 0.1%, whereas the second quarter brought a rise of 0.5%. These figures are taken from estimates produced by the Office for National Statistics. The third quarter also saw a drop in overall economic growth, by 0.1%. Much of this is being attributed to measures introduced in the recent budget, including various tax rises.
It does not present an encouraging picture for the economy as a whole, but economists are suggesting that there could be some knock-on benefits for homebuyers.
Some are arguing that the Monetary Policy Committee at the Bank of England may decide to reduce the base rate when it meets again next month. This is currently set at 4.75% and was expected to stay at that level until the latest economic figures were revealed.
Isaac Stell, an investment manager at Wealth Club, told Mortgage Strategy that the most recent quarter had seen momentum drop within the UK economy. He then added:
“The latest figures are likely to open the door to further rate cuts by the Bank of England before the year end.”
These cuts would act as an insurance against possible recession.
Mortgage advisors who have CeMAP training will feel that base rate reductions are good for their clients, even if the economy is struggling.
