Reported by MARC DA SILVA Property Industry Eye
Interest rates have been increased to 4.25% from 4% by the UK’s central bank in an attempt to get inflation under control.
The Bank of England’s decision to lift rates for the 11th time in a row comes after figures showed the cost of living rising by more than expected.
Inflation jumped to 10.4% in the year to February, despite predictions it would fall. The rate rise comes amid lingering worries over the global financial system after two US banks failed.
The latest rate hike makes the cost of paying back mortgages, other loans and credit cards more expensive but should mean people get a better return on your savings.
Industry reactions:
Richard Donnell, executive director of research at Zoopla, commented: “We don’t expect the increase in the base rate to make much difference to the outlook for the housing market. Demand for homes is down on last year but sales are still being agreed albeit at a slower rate (20% lower). People still want to move and households are resetting their plans in an environment of higher borrowing costs. Talk of a big price correction in home values has been overplayed and if you price your home sensibly, it’s likely to attract interest subject to some negotiation on the final price.”
Nathan Emerson, chief executive for Propertymark, said: “With interest rates again rising, we of course expect to see challenges within the market. For some current homeowners, the cost to remortgage will mean finding an extra £200 to £300 a month on average, whereas for many of those entering the property market, they will need to re-imagine their budgets and adjust their affordability.
“Previous increases are returning us back to a more sensible market with supply and demand levels evening out. This in turn has started to soften house prices and we would expect this trend to continue to counteract the unsustainable transaction levels and unachievable house price increases seen previously.”
