For the first time in over three years, the Bank of England has increased interest rates.
This sees interest rates rise from 0.1% to 0.25%.
The immediate impact of this increase for the housing market will fall on mortgage holders. This move is set to add an additional £15 to the standard monthly repayment for tracker mortgage customers.
Any homeowner with a standard variable mortgage is likely to face an increase of £10 per month on their mortgage payments.
It is believed that more than two million people in the UK have one of these mortgages.
Also, going forward, prospective buyers will need to budget for higher mortgage payments, which might impact some buyers.
No matter what your next move is in the housing market, you will find that Coakley & Theaker is on hand to assist you, so please get in touch if you need our help.
What are industry experts saying?
Vanessa Hale, a well-known name in the property market spoke to the Property Industry Eye website, saying; “This rate rise may not be significant but it is a clear statement of intent. The rise has been a long time coming, and with inflation now at decade high levels, there really is little alternative. The rate rise has been priced in to mortgages, and with fixed mortgages making up around 80% of the current market, the housing sector is unlikely to be impacted too dramatically. The reality is that demand for housing continues to outstrip supply which will sustain prices for 2022. However, with the cost of living continuing to rise, this could have an impact on the housing market for the medium term.”
Eleanor Bateman, Policy Officer at Propertymark, commented: “The increase in base rate to 0.25% is a small and necessary step and one that most had anticipated for some time. Mortgage rates have been creeping up over the past few months, and while those on variable rates will see payments increase, the cost of borrowing remains low relative to historic levels. Though, traditionally, the winter months see a decline in activity, our Housing Market report shows sustained demand with average sales agreed maintained to the end of October.”
Eleanor Bateman continued by saying; “With indications that lifestyle factors are continuing to prompt many into making a move, we do not expect today’s announcement to have a significant, negative impact on the market. Continuing uncertainties over COVID-19 may, however, have more lasting effects, and we would urge the UK Government to consider the property industry’s significance in any forthcoming decisions on further tightening of pandemic-related measures.”
Bruce Burkitt, another known name in the property sector, said: “The rate rise announcement is no surprise, however, the timing is. I thought this would come in early in the new year if the current COVID spike increased over Christmas and business failed to pick up come January, so it shows how serious our current situation is becoming. That being said, this is still only a small incremental rise, so it’s impact won’t be felt too harshly.”
Contact Coakley & Theaker for all your Bury St Edmunds property market needs
At Coakley & Theaker, we aim to support the local community as much as we can, and we know this is an extremely trying time. A lot of people are looking for support and guidance, and if you have any property or housing related questions, we are more than happy to assist you, so contact us today by calling us on 01284 769691.