Consumer confidence ebbs as many expect higher mortgage costs

Consumer confidence ebbs as many expect higher mortgage costs, according to the results of a survey carried out by the Bank of England (BoE).

A third of the public expect the cost of borrowing to rise over the coming year – and that’s according to a survey conducted before recent poor figures on the economy.

In a BoE attitudes survey released over the weekend, polling for which was conducted in early November, almost a half say they have felt the cost of higher interest rates on mortgages and bank loans.

Some 33% of consumers say the anticipate interest rates rising again over the next 12 months: this is slightly up on the 29% recorded in the last poll in August.

The BoE also found that 45% of the public said that interest rates “on things such as mortgages, bank loans and savings” had risen over the past 12 months, although this is actually down from 55% in August.

These findings are from attitudes expressed before the release of a shock figure, over the weekend, showing output fell 0.1% in October, following the 0.1% decline recorded for the previous month. 

This is the first time since the pandemic that the economy had shrunk for two consecutive months, with zero growth in the so-called powerhouse services sector, and manufacturing and construction declining 0.6% and 0.4% respectively. Economists had expected a positive headline figure.

Bank of England government Andrew Bailey said earlier this month that he expects four 0.25% cuts next year, moving the base rate from its current 4.75% mark.

The next inflation figures are due on Wednesday with markets expecting the cost of living to rise to around 2.6% in November from 2.3% the month before.

The Bank’s rate-setting Monetary Policy Committee is expected to hold the base rate at 4.75% the following day.

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