After the financial report released in the morning Bank of England BoE President Andrew Bailey spoke to the press. Bailey stated that the country’s economy has remained resistant to high interest rates so far. Some of the prominent statements from Bailey’s statement are as follows:
The increase in interest rates caused a stress load on the financial system. But the British economy has so far remained resilient. In particular, the resistance of lenders and borrowers against high interest rates is striking. We are witnessing vulnerabilities in other countries that have made similar decisions. Tight conditions in bank lending standards reflect that we are on the right track with regard to risk.
The Financial Policy Committee, FPC, is on the alert to monitor current risks and intervene in possible conditions that may arise on the spot. It will take time for us to see the effects of tight monetary policy.
The BoE, which started at 0.1%, brought the rate hikes up to 5% in its last meeting. The monetary authority shared a report before Andrew Bailey’s speech.
Bank of England Releases Financial Stability Report
In the report it shared in the morning, the BoE shared that the UK economy is resistant to interest rate hikes. According to the report, it will take time to see the full impact of policy. According to the report, the proportion of households with high debt burden is increasing. However, experts predicted that this metric would not exceed the peak in 2007 despite high inflation.
The BoE also stressed that the increase in financing costs could create difficulties for some small or heavily indebted companies. Officials cited risks in corporate borrowing in the global commercial real estate, private credit and leveraged credit markets.
Housing Loan Rates Rising!
According to data provider Moneyfacts, the average yield on two-year fixed-rate mortgages reached 6.66%, the highest level in the past 15 years.
The Central Bank estimated in the report that the average homeowner who refinanced their loan by the end of the year would pay £220 more each month, and that by the end of 2026, the monthly payments of about 1 million homes will increase by at least 500 pounds.
According to the news we shared on Kriptokoin.com, annual housing prices in the country continue to fall.
“The Banking Sector Is Solid”
The BoE announced that, as a result of the industry’s annual ‘stress test’, all eight of the UK’s largest banks are adequately capitalized against higher interest rates:
Financial Stability Report
“The profits are rising as the liquidity of the UK banks remains strong. This allowed them to help their customers while improving the capital of the sector.”
The BoE’s Financial Policy Committee kept the countercyclical capital buffer at 2%, a tool that banks use to manage risk and lending in the credit cycle.
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