As well as providing us with an additional bank holiday, Prince William’s wedding to Kate Middleton may also delay a rise in interest rates, a situation that will delight people with a contractor mortgage.
People with tracker mortgages will be interested to learn that economists have said the royal wedding makes a base rate rise less likely. The health of the UK’s recovery will be harder to judge because of the impact of the wedding.
The additional day off work to celebrate the royal wedding means the number of working days in quarter two is reduced by 1.5%. Samuel Tombs, an economist at Capital Economics, claims this could lead to GDP being 1.5% less than it would otherwise have been. This extra uncertainty reinforces the chances of the MPC holding interest rates as is for a while.
Meanwhile, although confidence had been returning to the housing market, things are not as clear cut as some people believe.
CheckRisk, the investment strategy group, has warned that house prices could drop by up to 25% before the end of 2012. The firm believes several factors could contribute to the fall including high inflation, high levels of debt, reduced mortgage lending and higher interest rates. Nationwide, on the other hand, expects there will just be a modest decline in the market this year.
The sheer shortage of properties is currently propping up the market. A report from the Home Builders Federation last week showed that last year saw fewer new builds than at any time since the Second World War.
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