Interest rates raised to 4.25% by Bank of England – property industry reaction

23rd March 2023
Home > News > Interest rates raised to 4.25% by Bank of England – property industry reaction

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.”

 


Share this article
  • icon
  • icon

Related News Articles

Stock shortage or increased demand? House prices rise again!

House prices increased for the second consecutive month in November, according to Halifax. The lender’s latest House Price Index recorded monthly growth of 0.5% but said average values are still down annually by 1% albeit at a better rate than the previous 3.1% decline.The typical UK home now costs £283,615, around £1,300 more than last month, Halifax said....

08/12/2023
Budget 2023: The key points of Chancellor Jeremy Hunt's speech

The chancellor has announced the budget for 2023. The UK will now not enter a technical recession this year, say independent forecasters the Office for Budget Responsibility (OBR). Inflation will more than halve and reduce to 2.9% by the end of the year, the OBR expects. Parents - working 16 hours a week - of children aged nine months to five years will get 15...

16/03/2023
Purplebricks: Struggling online estate agent puts itself up for sale Published

Online estate agent Purplebricks is up for sale after revealing it expects to lose between £15-£20m this year. It said the potential of the group may be better realised under an "alternative ownership structure". After being founded in 2012 the firm had dazzling early success but has seen its share price fall 98% from its heights. The company said it be...

17/02/2023
Bank of England raises rates to 14-year high

The Bank of England today raised interest rates to 4% - a 14-year high and the 10th consecutive raise - making rates their highest since 2008 as double digit inflation continues to bite. The Bank of England today raised the base rate from 3.5% to 4% – a 14-year high and the 10th consecutive raise – making rates their highest since 2008 as double digit inflatio...

02/02/2023