June 25, 2022

UK: Property industry reacts as interest rates rise

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From James Lockett ProperPR

Director of Henry Dannell, Geoff Garrett, commented:

“There’s a whole generation of homebuyers who have never known anything other than a sub one per cent base rate and so a second increase in such quick succession could understandably come as a concern. 

However, all things considered, the current landscape for those looking to borrow is still very good and locking in a favourable fixed rate now is the best way to avoid any nasty surprises further down the line.”

Managing Director of Sirius Property Finance, Nicholas Christofi, commented:

“We’ve already seen the mortgage market react to today’s increase in interest rates and so those looking to purchase a property may find the deal they had on the table isn’t quite as appetising as it was.

That said, there remains a wealth of very good options available and so there’s no reason they shouldn’t be able to secure the property they want at a rate that is affordable for them.”

CEO of Octane Capital, Jonathan Samuels, commented:

“While today’s increase in interest rates is unlikely to phase the average homebuyer, it could weigh heavier on the minds of the nation’s landlords.

Not only do they already pay far higher mortgage rates but they’re also subject to stricter affordability requirements. So if interest rates do continue to climb, they may face an increase in costs which will inevitably be passed on to the tenant. 

However, sector investment remains strong and current market conditions have seen landlords benefit from some very favourable levels of rental and capital appreciation of late. The majority will also be protected in the form of a fixed-rate mortgage, so it’s likely that they will 

Michael Bruce, CEO and Founder of Boomin, says:

“With recent figures showing inflation is at a thirty year high, a swift response from the Bank of England was only to be expected and there’s a good chance it’s not the last we’ll see this year.

This will no doubt bring cause for concern for those on a variable rate mortgage who could now see their monthly mortgage costs start to climb. With many already feeling the squeeze due to the increased cost of living this could bring further financial turmoil and so now is the time to act if you feel this is the case.

While a fixed-rate term won’t remain in place forever, it will bring a good deal of certainty and relief in the short to mid-term. 

The government needs to act to ensure that there is a healthy property market to stimulates the health of the wider economy. We cannot afford to allow inflation and interest rates working in tandem to slow the property market and reduce home mover confidence.”

Managing Director of Barrows and Forrester, James Forrester, commented:

“Before we head for the hills, it’s important to note that this is only the second interest rates increase since August 2018 and we’re a far cry from the apocalyptic double-digit rates of the late 80s and early 90s. 

The market has arguably never been better for those looking to borrow and it will take far more to derail the freight train of house price growth seen over the last two years.”

Director of Benham and Reeves, Marc von Grundherr, commented:

“Another marginal increase in interest rates is unlikely to dampen the house price party that UK homebuyers have been enjoying since the beginning of the pandemic and while the general expectation is that they may hit one per cent, this won’t materialise until the end of the year at the very earliest.

We expect a strong level of foreign demand to return to the market in 2022 and this will also help boost the market considerably regardless of what happens with interest rates.

Many foreign buyers, particularly across Asia, tend to finance their investments with banks closer to home, in Hong Kong or Malaysia for example. So UK interest rates won’t have a huge influence on them as most are already paying around three to four per cent and are happy to do so.”

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