For the first time in 10 years the Bank of England has raised interest rates from 0.25% to 0.5%. With the recent increase, many home owners have been keen to find out how this will impact their mortgage payments and the property market in general. The rate change will affect those with tracker mortgages the most, as their payments will automatically increase in-line with the base rate. Variable rate deals are also likely to rise so it is important that borrowers are in communication with their lenders at this time. Those on fixed-rate deals may not immediately be impacted by the changes but should be prepared for a shift in circumstance when their term comes to an end. As the interest rate rise has been relatively small, many believe that it will not have a significant impact upon the housing market. In October, Nationwide reported a 0.4% increase in house prices, a three-month high, despite the fact that many were anticipating the Bank of England’s announcement. Some suggest that this is because the rate increase was already being factored into the cost of housing, long before the changes were enacted.
An interest rate increase is not the only factor at play when analysing the property market. It is therefore best to consider this recent news in light of other market influencers. The healthy rate of employment and a shortage of homes on the market will help to more than offset any negative impact the interest rate increase might have had upon the market. Jamie Hynes, director of Seymours Estate Agents, Dorking comments, ‘house prices in today’s market are still on the up, despite economic uncertainty. For those contemplating a sale, it is important to price your property right to take advantage of the current market.’
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