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Factors Affecting the UK Mortgage Market

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Factors Affecting the UK Mortgage Market

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Questions and Answers

What effect does high government borrowing typically have on interest rates?

Decreases interest rates

Has no impact on interest rates

Pushes interest rates up (correct)

Keeps interest rates stable

How does high consumer borrowing usually affect interest rates?

Does not impact interest rates

Lowers interest rates

Increases interest rates (correct)

Stabilizes interest rates

What is the purpose of increasing interest rates when inflation is high?

To control inflation (correct)

To stimulate economic activity

To reduce personal debt levels

To encourage foreign investment

How do high UK interest rates impact UK companies that export their products?

Make their products more expensive to export Signup and view all the answers

Which measure is used as the official measure for the inflation target, separating out housing costs?

Consumer Prices Index (CPI) Signup and view all the answers

What effect do increases in interest rates have on the demand for mortgages?

Reduce the demand for mortgages Signup and view all the answers

How do low interest rates impact the demand for mortgages?

Increase the demand for mortgages Signup and view all the answers

Why might house prices rise when interest rates are low?

Demand for mortgages increases Signup and view all the answers

What is the primary aim of the Monetary Policy Committee (MPC) when altering interest rates?

Keep inflation within government-set parameters Signup and view all the answers

Why do changes in the base rate have an almost immediate impact on interest rates in the mortgage market?

Reference rate for financial services firms Signup and view all the answers