Buyers and sellers braced for latest interest rate rise

The property market is braced for another interest rate rise today after the latest inflation data shows the cost of living measure has failed to drop.

Inflation remained unchanged at 8.7% for May, with analysts warning a recession may be necessary to bring the rate down.

Analysts are expecting the Bank of England to raise interest rates from 4.5% to at least 5% this afternoon and the cost of borrowing is now forecast to peak at 6% as the central bank continues to battle stubbornly high inflation.

That could hit buyer budgets and also make sellers question whether to put their property on the market and the asking price they should list it.

Mortgage lenders have already been increasing their pricing ahead of the expected rate rise, with an average two year fix now above 6%, according to Moneyfacts.

Research by Nested has found that 48% of current buyers would need to reassess their position in the market before pushing forward with a purchase if rates rise further.

A quarter stated they would also have to pull out of a current property purchase if their mortgage rate was to increase, while half would have to borrow less or look at more affordable properties.

However, 28% stated that they would have to abandon their plans to purchase completely should the cost of borrowing increase any further. 

Alice Bullard, managing director at Nested, said:

“There’s a strong likelihood that we could see a thirteenth consecutive rate hike tomorrow and for the nation’s homebuyers, it will seem like the increasing cost of borrowing is never ending, pushing their plans to purchase that little bit further out of reach.”

Kindly shared by Estate Agent Today

Main article photo courtesy of Pixabay