With so much happening in the housing market of 2021 throughout the UK, many are left wondering, will interest rates rise shortly – and with the Bank of England currently seeking to control resurgent inflation, the outlook is that it will be affirmative.
This means that there is also a small opportunity window for buyers and sellers to get their deals done ahead of the BoE acting. Rates have remained low over the past decade, dropping from 5.0 to 0.5 after the 2008 financial crisis. When the Brexit vote destabilised the economy in 2016, the rate went half again to 0.25 per cent.
The unanimous vote is in
This was all before Covid taking its effect on the market. In September 2021, the BoE Monetary Policy Committee threw up a unanimous vote to keep the interest rate at 0.1 per cent, setting a record low.
Now, a likely rate rise is expected later in 2021 or early 2022 which is expected not to stop the housing market momentum – but slow it.
The latest housing market report has showcased that asking prices have surged over last month’s record, jumping to an average of 1.8 per cent. This equates to the highest percentage monthly rise for this part of the year since 2015.
The number of sales agreed upon was up by 15.2 per cent in September, this was against the 2019s normal market comparison. This is also the first time since 2007 that all market sectors and all regions of Britain have hit new record price highs over the same month.
The continued fast turnover of property for sale and opportunity windows to buy before potential interest rate rises are seemingly overcoming the final expiry of the stamp duty holiday incentive deadlines and are keeping activity robust.
Although more and more properties are making their way onto the market on a month by month basis, the level of stock replenishment is still not enough against the amount being snapped up currently.
Following the first lockdown was the advent of stock shortages, and at this time in 2021, they are set to continue due to the underlying housing market fundamentals remaining as strong as ever, as well as additional incentives to buy and fix your mortgage interest rates before the impending rate rise.
Will interest rates rise? Mortgage interest rates at this time are still lower than they have ever been before and lenders, with employment and wage growth also robust, are extremely keen to lend in the competitive market.