60% of brokers expect that the Bank of England (BoE) will raise interest rates in the second half of the year, a United Trust Bank survey has shown.
UTB surveyed 111 brokers in November of last year to gauge confidence in the market but only 4% of the brokers asked – who work in bridging, development finance and asset finance sectors – believe that the BoE will alter the base rates earlier.
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The survey showed that more brokers believe that the rise will occur in the first half of 2016, 26%, than in the second half (4%) or after (7%).
Harley Kagan, managing director of United Trust Bank, believes that current conditions are unlikely to trigger an interest rate increase.
Kagan said: "The Bank of England has held interest rates at 0.5% since March 2009 and with the plunge in oil prices and greater competition between supermarkets bringing food prices down, the rate of inflation has dropped well below the 2% target. These are not the conditions which would usually prompt an interest rate increase. Whereas a year ago many experts were confidently predicting an early 2015 rate rise, the focus has shifted to the latter half of 2015 at the earliest and even into 2016. Whilst this news won’t please savers, it’s excellent news for borrowers.
"With interest rates at historically low levels companies are more inclined to borrow in order to develop their businesses. Opportunities to acquire land and property or to invest in new plant, vehicles and machinery are much more attractive when interest rates are low. Mr Carney will be fully aware that increasing interest rates too soon could put a brake on investment amongst the sector of business that’s played a major role in helping the UK climb out of recession – SMEs. With economic recovery still fragile that will be a major concern for monetary policymakers."
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