Given that inflation reached a 30-year high of 5.5%, it is expected that interest rates will rise even further in the coming months, which largely explains why mortgage rates are rising
The Bank of England’s decision to increase interest rates from 0.5% to 0.75% last week in response to inflationary pressures had been widely predicted.
Given that inflation reached a 30-year high of 5.5%, it is expected that interest rates will rise even further in the coming months, which largely explains why mortgage rates are rising.
The last time the rate was as high was in March 2020, before the pandemic triggered a prolonged stamp duty holiday, a supply squeeze and double-digit house price growth.
It is premature to say prices will now slow down notably but an annual increase of 12.6% recorded by Nationwide in February does not feel like it has a long shelf-life, particularly when you factor in the cost-of-living squeeze, according to James Cleland, head of Knight Frank’s country business.
If a good property comes on at a good price, it will sell under competition, he said. However, it’s no secret that there are more headwinds out there and buyers have become slightly more realistic. For owners thinking about bringing their property to the market, it means the next few months represent a window of opportunity while demand remains so high.
In another sign that single-digit house price growth may be on the horizon, borrowers are becoming more prudent because of higher inflation.
Simon Gammon, head of Knight Frank Finance, reports that lenders have been withdrawing their best rates in recent weeks, which is increasing borrowing costs.
People are beginning to push themselves less, he said. They are asking how much they can afford to repay per month rather than how much they can borrow overall.
Some people have started to curb how much they borrow but in six months’ time they may not have that choice, Gammon added.
The articles are for information purposes only and Invest for Property shall not be held responsible for any errors, omissions or inaccuracies within it. Any rules or regulations mentioned within the website are those relevant at the time of publication and may not be the most up-to-date.
Invest for Property does not endorse any of the products or services that appear on it or are linked to it and are not liable for any action that you may take as a result of the content of this website, or losses or damage you may incur doing so.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.
Please remember that investments of any type may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
Credit: Source link
