Pantheon Macroeconomics

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U.K. Publications

Below is a list of our U.K. Publications for the last 6 months. If you are looking for reports older than 6 months please email info@pantheonmacro.com, or contact your account rep

Please use the filters on the right to search for a specific date or topic.

mortgage

30 Nov 2022 UK Monitor Escalating Debt Repayments Point to a Full-Blown Recession

Households are saving more than usual, taking on less credit, and increasing ad-hoc mortgage repayments.

Firms also are choosing to delever; October’s net repayment of external finance was the second largest ever.

House purchase mortgage approvals fell sharply in October; we expect them to fall further this winter.

Samuel Tombs (UK Economist)U.K.

29 Nov 2022 UK Monitor House Prices have Scope to Rebound in the mid-2020s

Incoming data are consistent with our forecast for a sharp fall in house purchases and an 8% drop in prices.

The MPC, however, won’t keep Bank Rate at 4% indefinitely; house prices should rebound in the mid-2020s.

Mortgage payments’ share of incomes will not return to 2010s levels; hefty rent rises have raised the floor.

Samuel Tombs (UK Economist)U.K.

21 Nov 2022 UK Monitor Is the Outlook for Households Really as Bad as the OBR Thinks?

  • The OBR's forecast for the effective mortgage rate looks
    implausibly high; we expect a smaller drop in RHDI...
  • ...But its forecast for the saving rate to fall to a joint-record low, supporting spending, jars with past experience.
  • The saving rate usually rises when the unemployment rate increases; rising rates will spur debt repayments.

Samuel Tombs (UK Economist)U.K.

11 Nov 2022 UK Monitor The Downturn in House Prices is Only Just Getting Started

  • Timely data show house prices now are falling in the face of surging mortgage rates and falling real incomes.
  • Supply is becoming scarcer, but it is not keeping up with cratering demand, we still expect prices to fall by 8%.
  • Watch out for a jump in wage growth in September; many public sector workers received a 5% pay rise.

Samuel Tombs (UK Economist)U.K.

1 Nov 2022 UK Monitor Households are Holding onto their Savings; Real Spending will Fall.

  • Households saved more and borrowed less than usual in September, as the economic outlook deteriorated.
  • Households will remain cautious as confidence continues to be hit by fears over mortgage payments.
  • Real consumption looks set to drop by 1.5% next year, reflecting a fall in real incomes.

Gabriella DickensU.K.

31 Oct 2022 U.K. Monitor No Shortage of Scary Charts Foretelling a Haunting 2023

  • Rising mortgage rates, energy prices and unemploy- ment will all drain the life from the economy next year.
  • Real government spending will be strangled in each of the next three years, in order to get the debt ratio falling.
  • A further rise in long-term sickness will be another un- welcome shock; no escaping a prolonged recession.

Samuel Tombs (UK Economist)U.K.

24 Oct 2022 UK Monitor Retail Sales will Remain on a Downward Trend Next Year

  • Retail sales in September were 2.1% below their 2019 average level; don't blame the extra public holiday.
  • The support to households' incomes from government policies will rise in Q4, then fall sharply next year.
  • Incomes also will be hit in 2023 by mortgage refinancing and job cuts; expect retail sales to keep falling. 

Samuel Tombs (UK Economist)U.K.

6 Oct 2022 UK Monitor Will Households Ever Deplete their Excess Savings Meaningfully

  • Households have not materially depleted the additional savings they accumulated during the pandemic, yet.
  • In real terms, excess savings no longer look impressive, and the distribution has worsened over the last year.
  • Households likely will increasingly use savings to pay off debt, in response to the jump in mortgage rates.

Samuel Tombs (UK Economist)U.K.

4 Oct 2022 UK Monitor Forecast Review, A Recession Induced by Policymakers Lies Ahead

  • We now look for a 1.5% year-over-year drop in GDP in 2023, worse than our prior forecast for a 1.2% decline.
  • The Energy Price Guarantee has shored up real in- comes, but the tax cuts are counterproductive, net...
  • ...The hit from the resulting drop in sterling and rise in mortgage rates will outweigh the direct fiscal boost.

Samuel Tombs (UK Economist)U.K.

28 Sept 2022 UK Monitor Surveys Point to a Small Drop in GDP in Q3, but this is Just the Start

  • PMI and confidence data for September suggest GDP edged down for a second consecutive quarter in Q3.
  • The downturn will gather momentum, as borrowing costs for households and businesses soar.
  • We now look for a 1.5% year-over-year decline in GDP in 2023, and CPI inflation not to return to 2% until 2025.

Samuel Tombs (UK Economist)U.K.

27 Sept 2022 UK Monitor Will the MPC Pick Prolonged High Inflation or a Mortgage Crisis

  • A recession now is all but inevitable; the key questionis how the pain will be distributed.
  • Hiking Bank Rate to 6% would crush domestically-generated inflation; mortgage defaults would soar.
  • Hiking more slowly would depress sterling and boost imported inflation, but is the lesser evil for the MPC.

Samuel Tombs (UK Economist)U.K.

21 Sept 2022 UK Monitor Mortgage Refinancing Set to Deliver a 1pp hit to Disposable Incomes in 2023

  • The effective interest rate for all mortgages has risen only slowly to date, but now looks set to soar...
  • ...As a rising number of borrowers refinance, and as lenders respond to the further jump in risk-free rates.
  • Expect a 1pp disposable income hit in 2023 if Bank Rate tops 4%, or a 0.7pp drag if Bank Rate tracks our forecast.

Samuel Tombs (UK Economist)U.K.

20 Sept 2022 UK Monitor August's Drop in Retail Sales Makes a 50bp Bank Rate Hike More Likely

  • The drop in August’s retail sales volumes was below consensus, but almost matched our forecast.
  • The weakness was broad based; consumers cut back on both essential and discretionary goods.
  • The larger-than-consensus fall makes a 50bp increase in Bank Rate this week more likely than a 75bp hike.

Gabriella DickensU.K.

15 Sept 2022 UK Monitor Will the Better News on CPI Inflation Keep Coming?

  • The month-to-month change in the August core CPI exceeded its seasonal norm by the least this year.
  • The recent decline in commodity prices suggests core CPI inflation will fall sharply next year.
  • Services inflation will be stickier, but the current support from energy price rises and VAT changes will fade.

Samuel Tombs (UK Economist)U.K.

2 Sept 2022 UK Monitor The Inventory of Unsold Properties will Rise Over the Next Year

  • Low unemployment means few homeowners will be forced to sell up, and construction already is declining.
  • Landlords, however, likely will struggle to raise rents in line with the jump in their mortgage payments.
  • We expect the stock of homes on the market, therefore, to rise over the next year, weighing on house prices.

Gabriella DickensU.K.

31 Aug 2022 UK Monitor Government Support Needed to Maintain Real Consumption

  • Households continued to save less and borrow more in July, in order to maintain consumption.
  • Looking ahead, though, people lack the fire-power to withstand future income shocks.
  • We now think a winter recession will be avoided only if the government beefs up financial support massively.

Gabriella DickensU.K.

30 Aug 2022 UK Monitor CPI Inflation to Top 17% in January, if Energy Prices Now Hold Steady

  • Futures prices indicate that the energy price cap will rise by a further 52% in January and 38% in April...
  • ...Implying that energy will directly boost the headline rate of CPI inflation early next year by 11pp.
  • Markets' bets on even faster rate hikes look misplaced; higher energy prices mean more labour market slack.

Samuel Tombs (UK Economist)U.K.

10 Aug 2022 UK Monitor Rate Cuts Next Year? Don't Price Them In Until Q4 2023 at the Earliest

Dave Ramsden is the first MPC member to admit rates might need to be cut "quite quickly" in the medium term.

The cuts currently priced-in by markets from late H2 2023 aren't big enough to lower households' interest bill.

But CPI inflation won't be near the target until Q4 2023; pre-election fiscal stimulus will limit the scope for easing.

Samuel Tombs (UK Economist)U.K.

4 Aug 2022 UK Monitor The Headwind from Mortgage Refinancing is Set to Intensify

The effective interest rate on the stock of mortgages rose by only 11bp in H1, but will jump by 30bp in H2...

...and by a further 30bp over the course of 2023, if markets are right about the path for risk-free rates.

Firms still are very exposed to movements in short- rates; the transmission mechanism remains powerful.

Samuel Tombs (UK Economist)U.K.

3 Aug 2022 UK Monitor Surging Mortgage Rates Point to an Outright Drop in House Prices

House purchase demand is falling quickly in response to the jump in mortgage rates and drop in real incomes.

New mortgage rates look set to rise further in Q3, greatly weighing on approvals.

A contraction in supply, however, will prevent a slump in prices; we still forecast a modest 2% decline in H2 2022.

Gabriella DickensU.K.

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