Steve White – Partner White & Guard
The Bank of England’s announcement today should come as no surprise. This has been mooted for a while now and, in my opinion, is actually long overdue.
“In the aftermath of the financial crisis, it made sense that rates should be kept low in order to drive activity in the market. That was, however, 10 years ago and the time is now right to start readdressing rates. Given that this is a relatively small increase in the base rate, it impact to most borrowers should be nominal and, assuming they have planned appropriately, relatively easy to adapt to.
“What the industry needs to ensure, however, is that it works to stem any knock to confidence amongst consumers that this announcement brings. Simply hearing news of a rate increase will lead some people to reconsider their financial and property decisions and whilst this is understandable in some respects, these decisions should only ever be made based on personal circumstances and with at least a medium, if not long, term view.
“When taken in this context, today’s rate increase should not have any impact on the property market’
Haart – Paul Smith, CEO
“This rise was predicted and as such we don’t believe it will impact the housing market at all. When you consider interest rates have historically been several percentage points higher, this very small increment should not affect anyone who has borrowed sensibly.
“With more stringent borrowing criteria in place we do not see very small increases in interest rates as being a significant impediment to the market. But this rise does show that rates could nudge up in future.
“A far bigger threat to the stability and health of the housing market is the punitive levels of stamp duty which the Chancellor should address as a top priority in his budget later this month.”
The UK’s property market will take this week’s expected rise in interest rates in its stride, according to ratings agency Moody’s, but it warned that the outlook for the buy-to-let market has worsened significantly.
The agency, which along with Standard & Poor’s was widely condemned for awarding triple-A ratings to sub-prime mortgage books before the 2008 financial crisis, said the British property market is more resilient than is widely believed.
Moody’s economist Colin Ellis said: “We haven’t seen quite the negative impact from the Brexit referendum that some had forecast, but then we weren’t as bearish as the OECD [Organisation for Economic Cooperation and Development] or the NIESR [National Institute of Economic and Social Research].
Russell Quirk of eMoov said: “Any increase in monthly payments, like interest rates themselves, will be marginal and manageable for those impacted. On the typical £150,000 loan, homeowners will be out of pocket around £15 to £30 a month, certainly no grounds to shout ‘financial meltdown’.
“House price growth and the market’s overall stability have been incredibly resilient despite the EU vote and a snap general election. A few quid added to the average mortgage repayment will not deter this growth in the medium to long term.”