Saturday, June 15, 2024

Bank of England rate rise won’t affect the economy, say investors

Assetz Capital investors claim that the Bank of England’s increased interest rate will have no impact on the economy in the near future, according to new data from the Q3 Investor Barometer.

The peer-to-peer business lender surveys its 29,000-strong investor community every quarter to determine their thoughts and predictions for the health of the UK economy.

Last quarter, 63% of investors were in no doubt that August’s rate rise from 0.5% to 0.75% would be a damp squib. 15% predicted a negative impact while just 22% thought it would be a positive for the economy.

While the interest rate rise may appear to be a positive for savers, high-street banks were called out for quickly adding the additional 0.25% to relevant mortgages but not doing the same to their savings accounts*. Even if the additional interest is added, inflation is still outstripping average savings rates, meaning consumers are effectively losing money.

Stuart Law, CEO at Assetz Capital said: “The cynical view is that an interest rate rise simply increases the banks’ profit margins, and it’s becoming difficult to argue against that. Our investors see that the main outcome will simply be higher mortgage rates – which isn’t going to deliver a huge positive economic impact.

“We don’t claim that peer-to-peer lending is the answer to everything, but, for informed investors that understand the risk, we are able to provide attractive target returns – while giving SMEs much-needed access to finance. It is alternative approaches like this that will unlock economic growth – not insignificant rate rises.”

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