Skip to main content

Fed rate hike ,possible hints of Bank of England, interest rate rise may follow US







US Federal reserve historical raising of interest rates by 0.25% after nine years  , Fed chief Janet Yellen  announces, will BoE to follow ? 

A recent survey carried on by NMG Consulting Survey on behalf of the Bank of England on The potential impact of higher interest rates and further fiscal consolidation on households:  How households adjust to changes in the economy has important implications for both monetary policy and financial stability. 






This article reports findings on the current state of households’ balance sheets. It reports that while household debt is still high there has been a modest improvement in mortgagors’ balance sheet positions over the past year. For instance, the share of mortgagors with high debt servicing ratios has fallen and is now close to a historic low. And both mortgagors and renter households consider unsecured debt repayments to be less of a burden than a year ago. Using the survey responses, the article assesses how households might respond to a hypothetical 2 percentage rise in interest rates. It finds that were interest rates to rise by 2% immediately, with no change in household incomes, “an estimated 31% of mortgagors would need to take some kind of action… down from 37% in 2014 and 44% in 2013.” 

This implies that while higher interest rates would increase the financial pressure on some households, they are in general “in a slightly better position to cope with an increase in interest rates than they were a year ago”.

 The survey also looks at the potential impact on household spending of the continued fiscal consolidation. 

The survey responses, collected in September, suggest that the consolidation is “likely to continue to weigh on household spending” and that “there are some households who may be vulnerable to higher interest rates and who expect to be more heavily affected than average by further fiscal consolidation”. 

The survey results suggest that the fiscal consolidation is an important factor that has weighed on household spending, and it is likely to continue to do so. 

There are also some households who may be more vulnerable to both higher interest rates and who expect to be more heavily affected than average by further fiscal consolidation, although that group is relatively small. 

Developments in income will be an important determinant of how households’ financial positions evolve, but will be of particular importance for more vulnerable households.


In aggregate, household debt remains high relative to income, but the cost of servicing that debt is historically low. From a distributional perspective, data from the latest NMG survey suggest that there has been a modest further improvement in the balance sheet positions of mortgagors over the past year. 

The proportion of households with high DTI ratios and high DSRs has fallen slightly, while reported levels of financial distress are low and have declined a little further. 

Those modest improvements in balance sheet positions imply that households are in a slightly better position to cope with an increase in interest rates than they were a year ago. 

Households reported that they had more income available to meet any increase in mortgage repayments. The survey results do not imply that an increase in interest rates would have an unusually large effect on household spending

Why does the PRA have a secondary competition objective? - Quarterly Bulletin article

The potential impact of higher interest rates and further fiscal consolidation on households: evidence from the 2015 NMG Consulting survey    <  41 / 76  PDF DownLoad




Inflation Report Press Conference - November 2015





Further Reading 

Bank of England concerns over Property buy-to-let boom December 2015 #update


Bank of England dampens prospects of early UK rate rise >Raising interest rates to deal with housing market problems would hit the rest of the economy too hard

How low can you go ? speech by Andy Haldane BoE Chief Economist

Bank of England warns action may need to be taken in the buy to let property market following a sharpincrease in the number of properties acquired by investors with the intention of renting them out

The futures bright the futures Purple , purplebricks.com IPO Aim stock Market Launch


buy-to-let Millionaires Judith & Fergus Wilson sell remaining property portfolio for £250 m

Three Truths about Finance - Governor of BoE - Mark Carney

UK Property Markets Bank Of England Financial Stability Report December 2015



Government ministers and housing association leaders have negotiated a deal to extend the right-to-buy policy


Mortgage Lenders and Administrators statistics Bank of England Sept 2015


UK net lending of mortgages, hits 5 year high

Help to Buy >Equity Loan scheme > Help to Buy NewBuy statistics Data to 30 June 2015 England

easyproperty.com CEO Rob Ellice says 42 % of UK will soon be using Online Estate Agents

Princes William and Harry visit DIY SOS street in Manchester UK

UK lending for mortgages reaches 5 year high BBA

Right to Buy Homes Sales: April to June 2015 England Update

The number of real estate agency uk jobs slowing at a dramatic rate 5000 decline factors

Marie's Question >Jeremy Corbyn The New Labour Leader takes his seat in the Houses of Parliament

More UK Homes sold in August 2015 than any month since Feb 2014 HMRC figs show

Building Markets for the Good of People > BoE Open Forum

Mortgage Update> lending hits eight-year high ,12 % Higher than 2014

Emoov online estate agent funding smashes past £1 million

English house prices see biggest September jump since 2002

SOUFUN largest property site in China gets $400M private equity funding from IDG Carlyle and management members

Rogue landlords should face stronger sentencing tougher license conditions and potential blacklisting says LGA

Comments