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Cml Report

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CML Report

As usual it's a pretty dull report but they hit the nail on the head in the last paragraphs.

But rising energy prices, declining exchange rate and stronger economic growth also pose upside

risks to the inflation outlook, even if inflation excluding energy prices is currently very low. The

specific concerns are the step deterioration in inflation expectations and the possibility that

higher oil prices may have weakened the economy’s potential growth rate.

Against this background, longer-term interest rates have risen and financial markets are

expecting the next move in the Bank of England’s repo rate to be upwards – to 4.75% by the end

of this year and 5% by the middle of 2007.

Our view is that there are sufficient uncertainties in the wider economic picture for rates to

remain unchanged for some months and that market expectations may moderate.

Higher fixed-term mortgage rates have lowered their relative attractiveness and will reduce the

cash flow benefits from remortgaging. And if potential house-buyers start to build in

expectations of rising short-term rates, affordability considerations may worsen so that the

attractiveness and feasibility of entering the market or moving will decline.

The level of mortgage market activity in March was similar to February. We expect activity to

remain well supported at this level. Interest rate expectations will be one of the factors

influencing the extent to which this occurs.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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