Interest rates: Estate agents react as cost of borrowing hits new high
With the Bank of England raising interest rates for the twelfth time in succession, estate agents react as the cost of borrowing hits new high.
The Bank of England’s strategy to tackle inflation isn’t working, an agent has claimed, after policymakers hiked rates for the 12th successive month yesterday.
Interest rates were yesterday increased from 4.25% to 4.5% by the Bank’s Monetary Policy Committee, the highest level since 2008.
The move was criticised by James Forrester, managing director of Barrows and Forrester.
The agent said:
“It’s clear that the Bank of England’s aggressive approach to managing the economy via a string of interest rates simply isn’t working and it’s the time the government stepped in to make Britain grow again.
“A twelfth consecutive increase will do little to stimulate the property market, with buyers left with little choice but to offer less due to the squeeze on affordability.
“If sellers wish to sell, they also have little choice but to accept the current reality of what their home will fetch in the market.
“However, the real worry is for those coming off a fixed term having previously secured a very favourable rate.
“The sharp rise they will experience in the monthly cost of their mortgage will be a real source of anxiety and many will be wondering just how they are going to manage.”
Marc von Grundherr, director of Benham and Reeves, suggested the hike shows the importance of buyers borrowing within their means.
Von Grundherr said:
“A further hike to the cost of borrowing will do little to enthuse the nation’s aspirational homeowners, who are currently battling with an astronomical cost of living while attempting to save enough to climb the ladder.
“The latest hike should serve as a warning for those who are considering borrowing beyond their means, or for those contemplating the re-introduction of the 100% mortgage.
“In the current climate, it simply isn’t worth the risk and you’re far better off waiting and accumulating a more stable nest egg with which to place a mortgage deposit.”
Nathan Emerson, chief executive of Propertymark, said homeowners on fixed rates won’t yet be affected by the changes and suggested pricing has been factored in for new borrowers looking to buy.
But Emerson added:
“For those on tracker mortgages, like many landlords in the buy-to-let market, this means another rise in outgoings.
“In the rental sector, a rise in the cost of supplying a home will put further pressure on rents and may see some investors forced to exit the market altogether, further worsening the extreme supply and demand imbalance seen already.
“It is imperative that the UK Government urgently do more to support homebuyers and landlords with their rising costs, especially as interest rates look to remain high into the start of next year.”
Kindly shared by Estate Agent Today
Main article photo courtesy of Pixabay
