Goldman Sachs analysts noted that rates, currently at 5%, are "notably restrictive" and expect them to decline to 2.75% by November 2025, a sharper drop than what money markets anticipate. Markets have priced in a more gradual reduction to 3.5% over the next year.
Inflation in the UK fell more sharply than expected in September, reaching 1.7%, prompting Bank of England Governor Andrew Bailey to suggest that the Monetary Policy Committee (MPC) could take a more aggressive stance on lowering borrowing costs.
Goldman Sachs believes interest rates will fall below market expectations due to "rapidly falling inflation and dovish MPC commentary." This would be welcome news for mortgage borrowers, who have faced higher costs since rates were raised to 5.25% to combat inflation, which peaked at 11.1% in October 2022.
If Goldman’s forecast holds, the Bank of England would cut interest rates by a quarter-point at each of its next nine meetings.
With such reductrions in interest rates likely to lead to a sharp increase in property prices in Gibraltar, many who have been sitting on theor hands throughout 2024 may be prompted to get in now and beat the price hikes.
