The Bank of England’s Monetary Policy Committee has just announced a rise in the Bank of England base rate of 0.25% – only the second increase increase in over a decade. Whilst the 0.75% base rate is now the highest it has been since 2009, it is still historically low when many still remember the levels of the late 1980’s when a mortgage rate of 15% was the norm!
The latest increase is probably designed to be nothing more than a shot across the bows in response to surprisingly high consumer spending, higher employment levels and wage rise expectations in order to ensure inflation remains firmly under control.
Certainly, housing inflation is already under control, with predictions that house prices are unlikely to rise by more than 3% per annum until 2025. Stability during these uncertain times is exactly what is required for a healthy housing market, where people who wish to move for “real” reasons, can do so without fear of making a mistake.
Of course, those homeowners on a fixed rate mortgage will not immediately notice any difference in their monthly payments, while those on variable rate or tracker mortgage will notice a small increase in monthly payments, typically of around £37.50 extra per month on a £180,000 mortgage.
This latest increase is unlikely to have any direct effect on the property market, although if you are contemplating a move it might be worth bringing this forward in order to secure a low-rate mortgage now in anticipation of any further incremental rate rises in the future.
As ever, as your local property experts, we’d be happy to advise, without obligation, on how this, and any other market influences, might impact on your moving plans or property value. Please feel free to call your local branch.
Neil Newstead, FARLA MNAEA MIRPM
Chief Executive Officer