Top economists expect the Bank of England to raise interest rates 0.25% on Thursday, a move that could put further pressure on homebuyers, according to a survey of top economists.
Nine economists unanimously predicted that the Monetary Policy Committee will raise rates at its meeting on Thursday, according to the survey personal finance site Finder.com published on Monday. It’s the first time the experts have been unanimous on the direction of interest rates since 2007, according to Finder.com—though their responses varied considerably when it came the impact of the impending hike and other economic indicators.
"Overall, the recent data flow has suggested the economy has regained some poise after a particularly weak first quarter," said James Smith, an economist with ING bank, in response to the survey. "With wage growth still performing reasonably well, it looks like the bank is gearing up for a rate rise in August. But what comes thereafter is less certain."
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Economic data that show rising wages and low unemployment are driving the expected rate hikes. Yet, house hunters are seeing any bump in their budgets from wage hikes offset to some degree by rising mortgage costs.
"A rise could mean borrowing becomes more expensive," said Jon Ostler, U.K. CEO at Finder.com, in a statement. "Our economists also predict negative outlooks for both household debt and housing affordability, so homeowners should evaluate their current mortgage to see if they’re getting the best deal."
A third of the economists surveyed have a negative outlook on housing affordability.
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In a note on Monday, London-based Pantheon Macroeconomics also predicted a rate hike on Thursday and said that even further interest rate increases are likely next year.
"In 2019, however, we think that the economy will begin to recover, enabling the MPC to raise Bank Rate twice, to 1.25%," Pantheon wrote in the note.