1. UK consumer spending has not gone down despite the high cost-of-living.
2. When the variable rates kick in for mortgages, the interest payment obligation would immensely affect consumption, and this in turn would lead a contraction in the money supply in the markets.
3. This decrease in demand would pull down the prices and therefore effect the top line.
4. The overall affect being lesser GDP or even worse, a full fledge recession.
Good synopsis, slight misjudgement on point no.2. Rates will affect those on variable mortgages but also those fixed rates set to refinance mortgages will see increased costs. Higher rates leads to a contraction in new home sales & discretionary income/reduced consumer consumption, leading to lower economic produce, lower GDP & the eventual recession.
1. UK consumer spending has not gone down despite the high cost-of-living.
2. When the variable rates kick in for mortgages, the interest payment obligation would immensely affect consumption, and this in turn would lead a contraction in the money supply in the markets.
3. This decrease in demand would pull down the prices and therefore effect the top line.
4. The overall affect being lesser GDP or even worse, a full fledge recession.
Is this it ? @joe
Good synopsis, slight misjudgement on point no.2. Rates will affect those on variable mortgages but also those fixed rates set to refinance mortgages will see increased costs. Higher rates leads to a contraction in new home sales & discretionary income/reduced consumer consumption, leading to lower economic produce, lower GDP & the eventual recession.