Lenders on a knife-edge
Tyson said he has rarely seen mortgage lenders as cautious as they are now, describing a market walking a tightrope between fragile rate optimism and the threat of further geopolitical shocks.
“I don’t think I’ve ever seen a banking system so cautious in my life,” he said. “They are just on a knife-edge. They don’t know what’s coming. It just affects everything – pricing, markets, gilts. You name it. It just shakes the world.”
Gilts have remained volatile since the Iran conflict escalated earlier this year. The Bank of England‘s Monetary Policy Committee (MPC) voted 7–2 to hold Bank Rate at 3.75% at its June meeting, with two members voting for an immediate rise to 4%. Services inflation stood at 3.7% and the Consumer Prices Index (CPI) at 2.8% in May, keeping the committee cautious ahead of its next decision.
Tyson predicted the picture could shift at the next MPC meeting, scheduled for 30 July, and said he would not be surprised if the committee moved to raise rates, citing the cumulative pressure of the Iran conflict and its pass-through into energy pricing. His view is his own assessment, and the base case among economists remains a hold, but a rise to 4% is considered a realistic possibility if services inflation stays sticky.
“I think that could be the one where they’ll pop it up because of what’s gone on in the last few months with Iran,” he said. “The banks are cautious, and they will be cautious. If I’m honest, that’s just nature.”