- Mark Carney, BoE Governor
While a hike of the UK's ultra-low interest rates is not certain, households should be ready for higher borrowing costs, Bank of England Governor Mark Carney said. Around 4% of mortgage holders remain vulnerable to higher interest rates as they pay out more than 40% of their household income to service their debts. However, given tightening of the labour market and wage growth, which was uneven across the economy, interest rates would increase gradually and slowly rather than decrease, after staying at all-time low since March 2009. According to the recent BoE report, the number of mortgage approvals rose the most since January 2014 to 71,030 in August, compared with an upwardly revised 69,010 a month before. Meanwhile, net lending for house purchases increased by 3.4 billion pounds, the highest level since May 2008.
This compares to 26,700 approved during the 2008 financial crisis peak in November 2008, and a surge to 135,200 approved before the financial downturn in November 2003.
Carney has previously said that a decision about the timing of a rate hike would become clearer around the turn of the year. Investors do not expect a first BoE move until late 2016 or early 2017 amid China's economic slowdown, Britain's near-zero inflation rate and the Fed's cautious approach about raising rates.
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