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 payments

10 May Will Rising Mortgage Rates Push House Prices Down?

Monthly payments will jump by about £100 for most households who refinance mortgages this year.

Mortgage approvals will fall sharply in the second half of this year in response to higher rates.

But house prices likely will stabilise, not fall; the supply of homes coming to the market will contract too.

Samuel Tombs (UK Economist)U.K.

5 May 2022 Households are Showing Little Sign of Riding out the Real Income Shock

Households must save less—or borrow more—to the tune of £9B in Q2, in order for real spending not to fall. 

That is possible, given that "excess savings" are £186B and consumer credit is £25B below its peak.

But people didn't draw on savings in March and still are reluctant to borrow, so GDP looks set to dip in Q2.

Samuel Tombs (UK Economist)U.K.

20 Apr 2022 The RPI-CPI Wedge will Return to its Pre-Covid Norm Next Year

RPI inflation will rise even more than CPI inflation in April, due to the bigger weighting of energy prices.

But house price growth is about to slow, while mortgage interest payments will rise only slowly.

Weighting differences point to a bigger drag on RPI inflation from falling energy prices next year.

Samuel Tombs (UK Economist)U.K.

19 Apr 2022 The Recent Strength in House Price Growth Won't Last Much Longer

House price growth was strong in Q1, but will now slow, due to rising mortgage rates and falling real incomes.

Several timely indicators of demand, including the RICS new buyer enquiries balance, are starting to soften.

House price growth looks set to slow to 4.5% this year, and mortgage approvals will fall to pre-Covid levels.

Gabriella DickensU.K.

11 Apr 2022 Rising Mortgage Rates will Soon Call Time on Rapid House Price Gains

The two-year fixed 75% LTV mortgage rate leapt by 35bp to 2.11% in March; it is set to rise to 2.7% by Q4. 

The current tight spread between mortgage rates and risk-free rates is unsustainable; deposit rates will rise too. 

Most refinancers will cope, but the rise in new rates will be severe enough to slow house price growth. 

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. National Accounts & Balance of Payments, Q4

  • In one line: Headline GDP numbers flatter the private sector recovery.

Samuel Tombs (UK Economist)U.K.

30 Mar 2022 Households Still Aren't Drawing on Savings, But Borrowing is Picking Up

  • Slowing money supply growth and households' continued reluctance to deplete savings are worrying signs...
  • ...But real expenditure could still rise this year if the recovery in unsecured borrowing gathers momentum.
  • Mortgage approvals have further to fall this year, but remortgaging activity should remain strong.

Samuel Tombs (UK Economist)U.K.

24 Mar 2022 Incomes Still Set to be Pummelled, Despite Last-Minute Tax Changes

  • Tax and benefit changes will lop 1.3% off disposable incomes in 2022-23, despite Mr. Sunak's new tax cuts.
  • The Chancellor could have been bolder; he has more headroom against his fiscal targets than in October.
  • Don't bank on extra pre-election tax cuts; the OBR is too upbeat on households' spending and productivity.

Samuel Tombs and Gabriella DickensU.K.

23 Mar 2022 Rising Interest Payments Explain Mr. Sunak's Expectations Management

  • Public borrowing in February exceeded the OBR's forecast by £5B; interest payments were partly to blame.
  • The OBR's forecast for interest payments in 2022/23 likely will rise by more than its forecast for tax receipts.
  • Mr. Sunak still can support households today, but he will prioritise retaining scope for pre-election tax cuts.

Samuel Tombs (UK Economist)U.K.

21 Mar 2022 The Housing Market's Strong Start to the Year will Not Endure

  • House prices appear to have risen further in Q1, but timely data suggest that buyer demand now is cooling.
  • The outlook for rising mortgage rates, falling real incomes and low confidence does not bode well.
  • We expect year-over-year growth in house prices to slow from its current 10% rate to 3.5% by year-end.

Gabriella DickensU.K.

2 Mar 2022 Slow Money Growth Signals Low Medium-Term Risk of High Inflation

  • Money supply growth is weaker than before Covid, signalling macro policy isn't excessively loose.
  • Households have remained unwilling to draw on their "excess savings" to support consumption.
  • House purchase mortgage approvals in January were 11% above their 2015-to-19 average, but will dip soon.

Samuel Tombs (UK Economist)U.K.

23 Feb 2022 The OBR's New Borrowing Forecasts will Make the Chancellor Grimace

  • Rising debt interest payments explain why January's surplus was smaller than the OBR forecast.
  • We expect the OBR to revise up its forecast for public borrowing in 2022/23 to about £97B, from £83B.
  • Mr. Sunak still will meet his fiscal rules, but will preserve his remaining headroom until nearer the next election.

Samuel Tombs (UK Economist)U.K.

15 Feb 2022 January CPI Inflation to Maintain the Pressure on the MPC

  • We think CPI inflation rose by 0.1pp to 5.5% in January, but annual weight changes increase the uncertainty.
  • Core goods prices surely leapt; data from the Eurozone and the U.K.'s BRC point to a very large increase.
  • A base effect likely depressed accommodation services inflation, but wider services inflation is trending up.

Samuel Tombs and Gabriella DickensU.K.

11 Feb 2022 Mortgage Rates will Rise Further, Slowing the Housing Market

  • The average rate for a two-year fixed rate mortgage, with a 75% LTV ratio, likely will leap to 2.1%, from 1.6%.
  • This increase won't be a problem for most refinancers, but it will impact affordability for new homebuyers.
  • Next week's labour market data will show Q4's small drop in employment is on course to be reversed in Q1.

Samuel Tombs and Gabriella DickensU.K.

10 Feb 2022 The Recovery in Construction Output will Gain a New Lease of Life this Year

  • Easing supply constraints and labour shortages should boost the recovery in construction in H1 2022.
  • Further ahead, falling real incomes and increases in mortgage rates will dampen housebuilding activity...
  • ...Even so, we expect construction output by year end to be about 1.5% above its 2019 average level.

Gabriella DickensU.K.

2 Feb 2022 Money Supply Data Suggest the Economy Won't Overheat This Year

  • Growth in the broad money supply reverted to its pre-Covid rate in Q4, despite very low interest rates.
  • Households dipped into their excess savings in December to maintain their spending, not increase it.
  • Mortgage refinancing will cease to boost disposable incomes in 2022; the effective rate will stabilise.

Samuel Tombs (UK Economist)U.K.

26 Jan 2022 Surging Interest Costs Won't Stop Sunak Easing the Real Wage Squeeze

  • Public borrowing in 2021/22 looks set to come in at about £170B, £13B below the OBR's Budget forecast.
  • The hit from higher interest payments will exceed the windfall from higher-than-forecast GDP in 2022/23...
  • ...But Mr. Sunak built some wriggle room into his plans; he can intervene on energy prices and meet his targets.

Samuel Tombs and Gabriella DickensU.K.

21 Jan 2022 House Price Growth to Slow in 2022 as Mortgage Rates Rise

  • House price growth remained strong in Q4, despite the return of the SDLT threshold to £125K at the end of Q3.
  • Timely indicators, however, suggest Omicron weighed on buyer demand at the end of the year, and in January.
  • Higher mortgage rates and falling real incomes will cause house price growth to decelerate this year.

Samuel Tombs (UK Economist)U.K.

13 Jan 2022 Job Moves to Revert to Normal Levels this Year, Dampening Wage Growth

  • The proportion of workers changing jobs surged in 2021 to reach its highest level in the past 20 years...
  • ...But lower confidence and a sluggish housing market will drive job moves back to pre-Covid norms this year.
  • Job-to-job moves also will trend down in the 2020s as the population ages, bearing down on wage growth.

Gabriella DickensU.K.

5 Jan 2022 Lower Saving Reflects Inflation Pressure, not Reviving Confidence

  • The return of monthly saving to pre-Covid levels is a sign of the real income squeeze, not surging spending.
  • The recent surge in house prices, however, is enabling refinancing homeowners to access lower interest rates.
  • Firms continued to repay external borrowing in November, but we remain upbeat on the capex outlook.

Samuel Tombs and Gabriella DickensU.K.

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