Rate rise likely to have minimal impact on housing market, say agents

Yesterday’s rate rise should have little effect on the property market or buyers’ intentions, according to most – although not all – agents. Some lenders have already raised their fixed and tracker rates with others likely to do so on Monday.

Paul Smith, CEO of Spicerhaart, said of the rate hike: “It will have minimal impact – 0.75% remains a historically very low base rate and this small increase is unlikely to affect the majority of borrowers.

“It is even more unlikely to make buyers think twice about buying property, given the cost of renting and the UK’s commitment to investing in bricks and mortar.”

Guy Gittins, managing director of Chestertons, said that the impact would be “modest” and unlikely to alter anyone’s decision to buy.

He said that it might instead inject a little more urgency into moving so that buyers could secure a mortgage “while lending remains at incredibly cheap rates”.

Rob Clifford, group commercial director at SDL, which operates lettings, property management and mortgages businesses, said: The cost of borrowing remains exceedingly low and is still amongst the cheapest since records began.

“Hopefully, industry commentary can now switch to the real barriers that are currently impeding a free-flowing housing market – and that is supply and demand and the level of initial deposit required.”

Ishaan Malhi, CEO of online mortgage broker Trussle, said that owners on variable rate deals should switch if they could.

He said that the average home owner on a variable rate with £200,000 to pay off on their mortgage would see repayments rise by £300 over the course of a year.

Russell Quirk of Emoov was among those agents sounding a worried note, saying: “Mark Carney really is pulling the rug from beneath the nation’s aspiring and existing home owners. The Government’s failure to build any meaningful level of housing stock is pushing prices ever higher and now the Bank of England has hit them with an increase in interest rates that will see mortgage payments increase, while resulting in a pitiful return on their savings.

“Although today’s hike will be digestible for many, it should act as a warning shot for UK home buyers and home owners. Yes, the cost of borrowing remains low, but interest rates are now at their highest in a decade and could continue to snowball, putting many in a perilous position when they come to buy or remortgage.

“Those looking to buy should be strongly advised against the temptation of borrowing beyond their means, as well as the importance of securing a fixed rate mortgage.”

 

 

 

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4 Comments

  1. Ric

    I agree, it can’t get any worse LOL.

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  2. LandlordsandLetting

    I am not an agent and agents are known for their boundless optimism but I have to say that although rates are historically low and a 025% rise isn’t much, the real problem is the signal it sends to would-be buyers. Let’s hope you are right.

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    1. Ric

      I completely agree, LandlordsandLetting.
       
      Our FS advisors laptop went crazy within 5 minutes of the rise. Deals going up between 0.15% and 0.30% Small amounts for sure, but what for another one, what when my 2 year or 5 year fixed rate ends and the news reports “no more rises until 2020…. what then? what will the deals be, will Brexit have ******** up my company, etc etc.
       
      Real world worries for real world people.

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  3. Mark Connelly

    I agree with LandlordsandLetting there has to be some balance to the cavalier ” It’s no problem” statements. Owners who went into the housing market in 2009 will now be paying the highest interest rates of their life.

    It’s no good pointing out ” when I was a boy we paid 16% you have never had it so good” We have a whole generation who think 0.5% is normal.

    Personally, I think it will have little effect but to dismiss it with trite comments like “historically rates remain low” is what I expect from politicians and is just a tad “head in the sand”

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