Property industry reacts to fifth consecutive rates increase

Michael Bruce, CEO and Founder of Boomin, says:

“A fifth consecutive interest rate increase will come as a real concern for many homebuyers. Having seen house prices spiral over the last two years, they are now facing an increase in monthly mortgage costs at a time when the high cost of living is already putting pressure on household finances.

This will no doubt cause many to reconsider just how much they are willing to borrow and this more conservative approach may lead to a reduction in the rate of house price growth seen across the market.”

CEO of Octane Capital, Jonathan Samuels, commented:

“While largely expected, today’s decision will cause further turbulence in what has already been a drastically fluctuating mortgage market in recent months. 

Some lenders have already jumped the gun and increased their rates in anticipation of this increase, but today’s confirmation will now open the floodgates in this respect, as the sector struggles to not only deal with a climbing base rate, but also with the extreme volatility being seen in the swap rates market.”

Director of Henry Dannell, Geoff Garrett, commented:

“With rising inflation remaining a concern, a further increase to the base rate was to be expected as the Bank of England looks to curb the rising cost of living across the UK. 

While these increases may have been incremental, the cost of borrowing is now substantially higher than it was just six months ago and this will, of course, impact the housing market and the price buyers are willing to pay.

We’ve seen mortgage approvals fall by an average of 3.4% over the last three months and we expect buyer demand will continue to slowly reduce over the course of the year thus dampening the extraordinary rates of house price growth seen in recent times.”

Founding Director of Revolution Brokers, Almas Uddin, commented:

“An increase in interest rates is always likely to bring an undertone of panic to the UK housing market but, as it stands, there’s no need to run for the hills just yet. 

There are still a range of lenders offering some very affordable products to suit a range of buyers and so it’s vital that you shop around when looking to secure a mortgage and consult a whole of market broker. 

Financial position is key when securing these more favourable rates and so when looking to do so, ensure that your deposit is as robust as it can be and that you’re cutting back on unnecessary spending elsewhere.”

Managing Director of Barrows and Forrester, James Forrester, commented:

“The UK property market has remained resolute despite a string of rates increases in quick succession and so today’s decision is unlikely to divert it from its current trajectory. 

Homebuyers continue to swamp the market, taking advantage of what is still a relatively affordable cost of borrowing and while there remains an insufficient level of stock to satisfy this demand, house prices will continue to climb.”

Director of Benham and Reeves, Marc von Grundherr, commented:

“The pandemic property market boom has caused many homebuyers to borrow beyond their means in order to secure a home, many of whom may now be regretting such a decision with interest rates continuing to rise. 

While fixed rate products will provide a certain level of comfort and certainty, those now approaching the end of this term will find the cost of their monthly mortgage payments is likely to climb sharply. 

This increased cost of borrowing may well put potential buyers off, or at the least, reduce the price they are willing to pay. 

This continual squeeze in money costs is bound to bite eventually and these rate hikes are only likely to push the economy toward recession, rather than halting inflation that stems from reasons beyond the consumers control

Christina Melling, CEO of Stipendium, commented:

“Rising interest rates are somewhat of a double edged sword for the nation’s homebuyers, particularly those looking to get that first foot on the ladder. 

On the one hand, the monthly cost of borrowing is now likely to increase even further, on the other, it will at least mean they see a better return where interest on their hard-earned saving pot is concerned. 

That said, while mortgage providers are quick to adjust their rates in line with the Bank of England, it can take far longer for this benefit to filter down to variable rates savings accounts. So it’s fair to say that today’s increase won’t come as welcome news to those currently struggling with the cost of buying a home.

The chances are rates will continue to climb over the coming months and so those that are coming to the end of a fixed term or are currently on a variable rate product will want to carefully consider their next move.”

Managing Director of HBB Solutions, Chris Hodgkinson, commented:

“A further rates increase means that many home sellers may now find their sale in jeopardy, as the nation’s homebuyers start to get cold feet due to the increased cost of borrowing.

While we’re unlikely to see buyer demand evaporate completely, this growing uncertainty is sure to dent market confidence.

As a result, we can expect to see market values stutter over the coming months, joined by an unsavoury supporting cast in the form of increased fall throughs and down valuations, as further increases are forecast for the months ahead.”