Tag Archives: Bank of England Updates

Bank of England quarterly inflation report summary Landlord News, Latest Articles

No need to panic about interest rate rises as we are still in a bad place, but an improving place economically.bank_of_england

Yes “Forward Guidance” is dead because the Bank of England got their unemployment prediction wrong, but we still don’t really know why.

Unemployment dropped to 7.1% from 7.7% in three months making redundant the figure of 7% unemployment being any kind of trigger for looking at the bank base rate. This drop is statistically unprecedented being 4 times more than any previous drop for the same level of growth!

However Forward guidance could be said to have been a success by giving confidence for the economy to grow with GDP increasing by 0.7% in the 4th quarter. Forward Guidance was largely understood to have a stabalising effect by the business industry even if it wasn’t by households and popular press.

The irony is that the growth was largely caused by household spending even though incomes are stagnant and not any productivity increase, although construction figures have recovered.

BofE Household spending

This growth in household spending on goods and services could be pent up demand from previous years de-leveraging household debt. Eg a new car purchase may have been put off since the credit crunch, but now it is getting older and more expensive to run people are now making those purchases. This type of growth is not sustainable in the long term and is why the Bank of England are cautious about the future recovery especially with heavy economic headwinds from European demand falling.

We are still buying more from abroad and with European growth stalling and hence demand for our goods and services so our trade deficit is actually worsening. It is the strength of the Pound, which although having a positive effect on keeping external inflation lower, is making our exports less attractive. This is the age old economic conundrum that what is good for one part of the economy is usually bad for another.BofE Tradedeficit

 

 

Looking forward The Bank of England believe there is still a lot of spare capacity in the labour market and that is what should be targeted to see a sustainable improvement in growth. What they mean is that on average workers are underemployed and could be more productive. During the recession output dropped by a far greater ratio than employment and especially considering the recent figures on unemployment there must be spare capacity for employees to be more productive.

 

It is this spare capacity that the Bank of England are going to be carefully monitoring and targeting for any future decisions on monetary policy. The Bank of England believe that the natural level for unemployment is around the 5% point and that we are unlikely to see too much wage lead inflation before this is reached.

BofE Labour Productivity ChartSo in summary the good news is that the main target figures of growth at 2% and inflation at 2% are on target, but productivity is slow and the trade deficit is increasing. Therefore there is no short term requirement to dampen a fragile recovery by increasing interest rates and if there is any need to do so in the medium term it would be by very gradual small amounts.

BofE GDPchart

 


Bank of England Inflation Report and Economic Roundup Financial Advice, Latest Articles, Property Investment News, Property Market News

“When is the Bank of England base rate going up?” is the most frequent question I am asked by property investors. Not this year or next is how I assess the latest figures from the May Bank of England inflation report.

Below are some of the key factors affecting the UK and Euro-zone along with a full copy of the Bank of England report. Continue reading Bank of England Inflation Report and Economic Roundup


Agents’ summary of business conditions April 2012 Buy to Let News, Latest Articles

The Bank of England has released its Agents’ summary of business conditions April 2012, and they believe the housing market to be experiencing mixed fortunes.

Buy to let demand has grown due to growth increases, this has “helped to put a floor under prices.” Asking prices have supposedly been more realistic and new-build has seen more demand, both helping buyers. Continue reading Agents’ summary of business conditions April 2012


First drop in buy to let lending for two years Buy to Let News, Latest Articles, Lettings & Management, Mortgage News, Property Market News

Demand for buy to let lending has dropped for the first time in two years, according to the latest Bank of England lending survey.

Specialist landlord lenders told the Bank that they expect the figures to be a blip and the market will quickly recover from the slight fall. Continue reading First drop in buy to let lending for two years


Agents’ Summary of Business Conditions – January 2012 Financial Advice, Latest Articles, Property Market News

The Bank of England has released the Agents’ Summary of Business Conditions for January 2012, calling the market ‘subdued’. They also noted the growing breaks in chains due to aborted sales and withdrawals having a positive effect in the rental sector. Social housing has taken a hit too due to the reduction of government grants available to housing associations.

Read the report in full


Bank Rates Stay at 0.5% – But New Mortgages Cost More Financial Advice, Latest Articles, Property Market News

The Bank of England has kept the base rate at 0.5% and pegged quantative easing at the previously agreed £275 billion.

The decision means the base rate has sat at the record low for 34 months in a row and the £75 billion quantative easing top-up will complete around the end of the month. Continue reading Bank Rates Stay at 0.5% – But New Mortgages Cost More


Bank of England Agents’ summary of business conditions December 2011 Buy to Let News, Latest Articles, Property Investment News, Property Market News

The Bank of England Agents’ summary of business conditions December 2011 has been released, reporting a “softening housing market”.

First time buyers remain held back due to deposit requirements and home-owners are still wary to trade up due to market conditions. Buy to let investors on the other hand are providing “a source of demand for smaller properties favoured by would-be homeowners unable to buy.” Continue reading Bank of England Agents’ summary of business conditions December 2011


Bank of England Believe the Floundering Economy Will Gain Traction Next Year Financial Advice, Latest Articles

The Bank of England have released details of their latest inflation report, and despite the economy worsening and global economy slowing, they believe 2012 to be the year of the sharp inflation decline. They also expect GDP growth to continue to be weak until 2014.

The discomfort in the Eurozone has created an air on uncertainty over the expectations of growth and inflation, they warned if a suitable resolution is not found it “poses the single biggest risk to the domestic recovery”.

You can read the full report here.


BoE Worried for Some Businesses Latest Articles, Property Investment News

Bank of England LogoThe Bank of England have released their Agents’ Summary of Business Conditions for October, and have once again found a depressed housing market. They say high loan to value products are being offered, but the take up has been low.

Worryingly, they said the stagnant market and lack of transactions has provoked concerns for letting agents and solicitors who rely on the housing market.

Click here for the full version of The Bank of England’s Agents’ summary of business conditions October 2011.


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