Yesterday’s news from the Bank of England on their 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.”