A very interesting piece of Data by ONS.

The data shows that between 2018 and 2021, a vast majority of mortgages taken out in the UK were 5-year and 2-year fixed rates.

Why is this interesting?

It means that during this year and next year, a large number of mortgages in the UK will be up for renewal. As a consequence, those who have been on the typical rates for the time of 1-3% , will be looking at their rates doubling or more!

An increase in mortgage payments will create a negative wealth effect. The negative wealth effect occurs when individuals see a decline in the value of their assets. As a result, they feel less confident in spending, borrowing and taking financial risks. As a result, I believe we may see a significant decline in UK consumption and investment, coupled with high interest rates, businesses in the UK will face an interesting Q4 for 2023 and Q1 for 2024.