A vast number of buyers are being cautioned to act with haste to secure decent mortgage pricing as the mortgage interest rates have topped a 13-year high as of the beginning of May.
At the start of the month, the Bank of England’s Monetary Policy Committee increased the base rate to 1% from 0.7% and – with it expecting inflation to hit 9% over the next few months from its previous 8% forecast – it looks likely to hit 10.25% by December. This foreshadows potential interest rate rises in an attempt to bring those rates down.
Estate agents Stockport are not heralding an immediate market impact as a result of the latest hike, but warnings to buyers that it may start to get a bit harder and have a lot more expensive on the mortgage side have been raised – especially with the rising price of bills.
The influence on how much buyers are comfortable paying for a property may be highlighted from this shift, as well as what type of home they have on the radar. With continued lack of stock on the market being the biggest issue, buyers are in an anxious state.
They are not as anxious concerning the rising house prices and mortgage rates, but more with the limited choices to choose from. Buyers who are on the hunt for a mortgage appreciate that while rates are on the rise, they are still incredibly low at this point.
The now regular increases in interest rates, as well as the seemingly-weekly adjustments in mortgage rates and the escalating costs associated with living, are undoubtedly looking to impact the housing market at some juncture around the corner.
First Time Buyers
First-time buyers look to be hit in all directions by rising rent rates, higher interest rates and more stringent lending criteria. Whilst they look to come off with the sharp end of the stick, they also play a very vital role in the housing market’s operation from the bottom of the ladder straight to the top.
As the later year sees further interest rates rise, demand is not predicted to be affected – especially amongst the higher loan to value mortgages from first-time buyers. This may slow price growth in areas supported by these buyers, where lower disposable income margins get hit by increased living costs and affordability is affected by mortgage interest rates.
Prices are not expected to fall with the labour market being strong and interest rates remaining at their historically low levels.