Interest rates in the UK are down from last month and from the same month in the previous year. While this would seem to indicate an improvement in the economy as home-buying typically correlates with this, the fact is that many are just utilizing this drop to refinance existing mortgages. People are still uncertain due to the lack of wage increases. Even though inflation decreased somewhat, consumers are still not willing to rush into the buying arena.
Key Takeaways:
- Mortgage lending has rebounded in the UK, with gross mortgage lending amounts in June totaling almost ten percent higher than May’s amounts.
- However with inflation kicking in, consumer spending ability and confidence is eroding.
- With economic conditions less than perfectly sanguine, some buyers will tend to pull back, though re-mortgagers may hurry to try and lock in favorable terms.
“A rise in rates against the backdrop of falling wages would negatively impact consumer spending which would be bad news for the economy.”