It is no secret that the recent activity of changing interest rates has cast an unnerving spell over the property market. With inflation and increasing interest rates it is making it harder for first time buyers to get their place on the property ladder as well as reducing many peoples affordability with houses as mortgage payments increase and are uncertain.
As of June 2023 the bank rate interest rate was raised to 5%. This made, in attempt to slow rising prices due to soaring inflation rates backdating to post COVID.
Although the Government have a 2% target for interest rates, it has been predicted to rise before it manages to come back down. The international Monetary Fund have advised that the interest rates will need to remain higher for longer than previously forecast, to try and counter the high inflation.
What Does This Mean For Me?
Whether you are looking to buy or sell your property, the interest rates will no doubt effect you and your decisions in the market.
For sellers this may be a good thing as you may get more than initially expected for your property due to the inflated market. However equally, some buyers will find their affordability decreases due to higher mortgage rates so properties may get less interest and the seller may have no other option than to reduce the asking price. This factor mainly targets those in the lower end of the market and those potentially selling to first time buyers.
For buyers this could easily present issues for those looking at getting mortgages as lenders will likely pass on the interest rate rise onto their customers however there is a brighter side. Some vendors may consider lowering their price or accepting lower offers making more attractive purchases available that perhaps before.
Forecast Interest Rates
With interest rates set to rise before they fall, the steady decrease is not estimated till mid 2024 and is then expected to reduce over the next 5 years.
In terms of mortgages and buyers wanting to purchase with a mortgage the upcoming is rather uncertain. Historically the best fixed rate mortgage deals vanish as soon as lenders see any sign that the Bank Of England may raise interest rates again.
The easiest thing we recommend is finding a mortgage advisor you trust and explore the best options with them e.g fixed mortgages and variable rate.
For sellers, leave it with the professionals. If you have an agent you trust, hopefully us! then listen to their advise regarding market price and fluctuations. We want whats best for you and equally, best for us.
In Summary, as of the current situation, the UK property market is being influenced by historically low interest rates. These low rates have resulted in increased affordability for potential homebuyers, as borrowing costs remain relatively cheap. This has stimulated demand for properties, leading to a competitive market and, in some areas, rising property prices. Additionally, low interest rates have encouraged homeowners to refinance their mortgages, freeing up disposable income that can potentially be invested in the property market. However, there are concerns about the potential for a housing bubble due to the combination of low rates and high demand. Overall, the current low UK interest rates are playing a significant role in shaping the dynamics of the property market, with both positive and potentially concerning effects.
Although the uncertainty of interest rates is making an impact on the property market. This is still an active and good time to sell or buy your home. With the correct guidance, you can still get the best price and best deals in relation to others in the market. And on a positive note, Market conditions are slowly but surely improving and this season is still one of the busiest times for agents with sales and purchases.
