View more on these topics

​Schroders factors ‘Osborne Boom’ into housing scenario analysis

Fund manager Schroders has included an “Osborne Boom” into its analysis of the UK housing market, which it forecasts will have a ripple effect on the wider economy.


The investment firm’s report forecasts house price inflation to rise to 5.5 per cent by Q4 this year and to continue at that rate throughout 2014.

With the roll-out of the Help to Buy scheme second phase in January 2014 which will include existing homes as well as newly-built properties, Schroders expects to see greater demand from potential homebuyers who have till now been kept out of the market by strict lending conditions.

With this in mind, the report has included the “Osborne Boom” into the scenario analysis.

This scenario predicts a sharp rise in housing demand with property price inflation hitting double-digits as well as greater consumption in the wider economy leading to hiring and business investment increases.

The report says that by the end of this scenario the Bank of England would be forced to increase the base rate with a view to tempering activity.

However, Schroders has followed this scenario analysis with a note that owing to a rising, unaffordable current market along with “possible unattractive fees for banks”, demand should be tempered in any case.

Trinity Financial Service product and communications manager Aaron Strutt says: “I don’t think there’s any doubt that there will be a greater demand created by the second phase of Help to Buy with people stretching themselves to move up the property ladder and into bigger homes.”

“Depending on how high the demand goes, we may very well see the greater effects felt by the wider economy.”



Lloyds set to link proc fees to business quality

Lloyds Banking Group will begin linking the procuration fees it pays brokers to the quality of business submitted from the beginning of next year, Mortgage Strategy understands.

India rate cut – more to come?

Kunal Desai, Head of Indian Equities at Neptune Investment Management India’s stockmarket rallied this week following news that the central bank was cutting interest rates more aggressively than expected. Commenting on the rate cuts and what this means for India’s economic growth, Kunal Desai notes that there were two important details in the announcement that have […]


News and expert analysis straight to your inbox

Sign up