As the Bank of England warns of an increase in the base rate next year, estate agents are concerned that the rise in interest rates will knock the confidence of home buyers.
As interest rates have been at rock bottom for seven years, many property buyers have never experienced rate increases. Despite the fact that a small rise in interest rates won’t mean that properties are suddenly unaffordable, estate agents fear that an increase in rates of just one per cent may cause home buyers to become unsure of the property market. As confidence in the housing market increases, house prices generally do the same.
Although the Bank of England won’t be introducing an increase in the base rate until next year, most mortgage lenders have started to withdraw some of the best deals and are replacing them with slightly more expensive ones. Many home owners will be considering whether to swap to a better fixed rate, but for some who are tied into existing contracts, they may not get the chance to secure such low deals again.
The effects of the base rate increase will depend on how much it rises by. If the governor of the Bank of England, https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpg Carney increases the base rate by 0.5 per cent most home owners will only see a small difference in monthly repayments, but for larger increases, the effects on a household income could be disastrous, especially in the south where property prices are higher. To make sure you make the best decision, consult a financial adviser who has taken CeMAP training in London, Manchester or elsewhere in the UK.