The housing market months ago was growing at a rapid level.  The economy was also on a strong steady rise to recovery.  Now the housing market has slowed and apparently so has the economy.  It is a fact that a strong and healthy housing market is detrimental to a healthy economy so it is not surprise that both have shown signs of slowing.

According to the latest Markit/CIPS purchasing managers’ index (PMI) the UK economy is slowing but it will outpace other advanced economies this year.

The economy is on track to increase at a rate of 0.5% in the final quarter of the year.  Economic growth had increased by 0.7% in the third quarter, according to data in the PMI.  The Bank of England was more optimistic with a forecast of growth expectation of 0.8% for the last three months of the year.

The forecasts will no doubt play some part in the meeting this week of the Bank of England’s Monetary Policy Committee (MPC) as they gather for their monthly meeting.  It was thought when the economy and housing market were seeing stronger growth that the MPC would be drawing closer to increasing the interest rate from its 0.5% historically low level to perhaps 0.75% in its first increase by the beginning of next year.  In recent months, two members have been voting for a 0.25% increase and it will be interesting to see if that trend continues in this week’s meetings.  The minutes will be made available later in the month.

Lenders have surprisingly allowed their recently low interest rate remortgages to remain available.  Lenders are facing stronger criteria in their asset holdings against lending levels and that should have them increasing the cost of borrowing.  Perhaps the continued low demand from homeowners is keeping the remortgage lending market competitive and that offers a great opportunity for mortgage holders to get a deal and save money.