Investment firm The Pure Gold Company has seen a 39% increase in first time purchasers investing in physical gold in the last week amid concerns that an interest rate rise could affect mortgage repayments and lead to a collapse in property values. The market widely expects the Bank of England to raise interest rates today for the first time in a decade.
CEO Josh Saul said: “We’ve also seen a 69% increase in financial professionals over the age of 50 purchasing physical gold in the last week. They are concerned that interest rates will ultimately rise to pre-crisis levels of 5%, which could trigger a situation similar to the early 90’s when people couldn’t afford to pay their mortgages and values fell by more than 30%. Our clients are concerned that we have record high debt with record low interest rates and over 8 million people have never known a rate rise in their adult lives.
“In a survey carried out by The Pure Gold Company, 61% of people under the age of 40 stated that they would struggle to pay their mortgages if rates increased to pre-crisis levels of 5%. Some people’s monthly mortgage obligations could more than double. A quarter of the people who made enquiries to The Pure Gold Company in the last week have already taken action over the last 6 months to sell investment properties and use the proceeds to purchase physical gold.
“Our clients view physical gold as a longer term store of wealth that increases when other assets fall in value. With all the uncertainty surrounding Brexit, North Korea and the global economy, the prevailing concern is one of unpredictability, and physical gold has a proven track record of guarding against some of these risks.”