Fixed-rate loans delay and reduce effect of higher rates

The shift away from floating-rate to fixed-rate mortgages presents risks as well as benefits. It will protect homeowners who are lucky enough to have a long time remaining on their fixed rate contract from higher mortgage payments. But that reduces the potency of monetary policy, raising the risk that interest rates have to be raised further or kept high for longer to compensate.

In view of the wider interest, we are also sending this UK Housing Update to clients of our UK Economics Service.