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How the Unexpected Bank of England Rate Hike Can Impact U.S. Mortgage Rates

In a "surprise" move, The Bank of England raised its benchmark by 0.25% to 5.250%. Only one of 50 economists surveyed had predicted the increase and its unexpected nature played a key role in moving mortgage rates higher today on this side of the pond.

The Bank of England is equivalent to our own Federal Reserve Bank. It issues debt (i.e. bonds) backed by a strong government and, therefore, the debt is considered to be guaranteed money.

This is its third rate hike since August.

Because global bond money tend to flow to higher relative returns (i.e. to England) from lower relative returns (i.e. the United States), we can assume that The Bank of England's move forced traders to sell U.S.-backed bonds and that pushed mortgage rates higher

It’s truly a global marketplace and this is one of the major reasons why it’s impossible to predict where interest rates are headed in the future. Just when you think you understand the U.S. market, a foreign nation makes an announcement that shifts the entire balance.

Scott Kinne

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Vice President, Senior Loan Officer
NMLS ID #182351
Office: 703.293.6146
Mobile: 571.237.6241
Fax: 571.317.2478
skinne@fhmtg.com

Licensed In Maryland, Virginia, Washington D.C., West Virginia
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First Heritage Mortgage, LLC, Company NMLS ID #86548

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