0.75% rate hike will ‘send shockwaves through property market’, brokers say


“Yes, rates will still be low relative to their historical average, but a large number of homeowners and buyers have never experienced such high rates.”

Ross Boyd, founder of mortgage comparison platform, Dashly: “A 0.75% rate increase will send shock waves through the real estate market. Yes, rates will still be low relative to their historical average, but a large number of homeowners and buyers have never experienced Factor in the impact of soaring inflation and an economy teetering on the edge, and you have all the ingredients for a serious slowdown in transaction levels as people buckle up to the turbulent twelve months ahead. It’s no surprise that we’re seeing a significant number of people on our platform choosing to pay a prepayment charge in order to lock in before rates rise further. In today’s real estate market, more people than ever are playing percentages.

Anil Mistry, Leicester-based Broker Director, RNR Mortgage Solutions: “Younger borrowers aged 35 and under will feel the impact of the rate hike the most, as many of them will never have experienced rate hikes like this and the base rate will climb to these levels. . The global financial crisis has created an artificial rate environment that has lasted for almost a decade and a half, and we can now get out of it. Many borrowers and homeowners are going to be brought down to earth with a thud. Borrowers who may have been fixed in recent years, possibly on rates of 2% and below, can now expect fixed rate products to be in the high threes or even start with a four. Add to that the rising cost of living and people’s disposable income is seriously affected. Therefore, it is essential that if your current product is ending within the next six months, you speak to your Mortgage Broker as soon as possible to have your situation reviewed and obtain a new rate before any further rate increases from the Bank of Canada. England. ”

Andrew Montlake, CEO of Coreco: “There is no doubt that a rate increase of 0.75% will make many potential buyers think twice about either the value of the property they would like to buy or whether they are ready to buy now. , period. Even though rates will still be historically low, many people who have only owned stocks post-global financial crisis will start to feel very exposed. Some upside wannabes may lower their tools and choose to sit still for the time being. For first-time buyers, the psychological impact of a rate hike of even 0.75% is likely to be less pronounced because their alternative is the rental market, where prices are off the scale. Even if rates rise to 2.5% and beyond, for many it will still be cheaper to own than to rent. It is said that prices will fall as rates rise, but I think that is unlikely unless the economy goes into a deep and prolonged recession. We are more likely to see the rate of price growth fall, and perhaps even stagnate, over the coming year. As always, the lack of supply will act as a glass floor under the housing market.

Emma Jones, managing director of Frodsham-based broker, When The Bank Says No: “A further rate hike this week will likely deter many people from wanting to increase their height unless they really need to. For many, the prospect of potentially much larger mortgage payments and heating bills will put pause moving up the ladder. Further rate hikes are likely to encourage more borrowing for home improvements and see people start to put their finances in order to reduce their monthly outgoings. However, demand for homes is still just as strong. strong, so we certainly don’t expect the housing market to come to a complete halt, even if rates rise 0.75% There is still a housing shortage, so a sudden drop in prices is unlikely We’ve seen a handful of lenders raise their rates already ready for Thursday’s announcement, but we can expect more withdrawals from last minute products until then. I’d like to think that people would extend the term of their mortgage wherever possible to manage the payments before looking to sell their home in a hurry and potentially lose money. Undoubtedly, many people are not sufficiently prepared for the new tariff era we are entering. What is worrying for renters is that a rise in interest rates could cause landlords to raise rents to cover the rising cost of rental mortgages.

Samuel Mather-Holgate of Swindon-based consultancy Mather & Murray Financial: “A perfect storm is brewing around the housing market and the expected rate hike later this week will aggravate the moving low pressure front. Add to that the cost of living crisis and struggling economy, as noted. ‘s seen with last week’s poor retail sales data, and there’s every chance real estate transactions will fall sharply in the coming months as people batten down the hatches. worry about their job security, which means they won’t be making big decisions in the short term Most lenders have built in a proportion of the expected rate increase, but if it’s 75 bps base, I would expect lenders to raise rates further, and fairly quickly. Forced sales shouldn’t be a major problem, though. After the 2008 crisis, lenders put in place accessibility criteria str icts to ensure that customers could cope with rising interest rates and rates, although rising, are still historically low. The new energy price cap will also ensure that many households are not pushed to breaking point.

Rob Peters, director of Simple Fast Mortgage, based in Altrincham: “Borrowers exiting fixed-rate mortgage contracts are seriously unprepared for the 240-volt interest rate shock they are about to receive. Rising mortgage costs, combined with rising mortgage prices raw materials and energy, will undoubtedly hurt the most indebted borrowers, some will have to downsize, buyers’ appetite will dwindle, and many ambitious buyers will have to put their new home on hold. , the basic need for people to have homes will always exist and therefore the wheels will not come out of the real estate market just yet.

Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “The Bank of England is damned if it does and damned if it doesn’t. If they fail to contain inflation, politicians will say they are not fulfilling their mandate to keep inflation at low and stable.However, rising interest rates will exacerbate the cost of living crisis, as it will inevitably drive up mortgage rates, which will reduce people’s disposable income.Over the past fortnight, we have seen many lenders raise rates in preparation for further base rate hikes, which will likely continue for the foreseeable future Tens of thousands of people with mortgages will be hit by a rate shock on a new mortgage If the Bank of England raises the base rate by 0.75% to 2.5%, most of my clients will get offers below the base rate. they will be faced with increases Nations of such magnitude not seen for more than a decade. This is likely to lead some people to downsize and others to be in arrears. Ultimately, this will dampen demand. we will say that interest rates have been much higher and that they have faced worse; however, when interest rates were much higher, people did not have to borrow nine times their salary to buy a house.

Imran Hussain, director at Harmony Financial Services, based in Nottingham: “People are starting to realize exactly how low rates have been over the past decade, and those who went blind and perhaps over-borrowed are facing serious financial hardship. Another rise rates this week may well see the people who were watching maybe the headcount increase put their plans on hold, but one thing it won’t do is deter early buyers or serious investors, because in every market, there is an opportunity. Since most people now know what their energy bills will be for the next 24 months, confidence is ironically stronger compared to the last three months in conversations I have with customers. a fortnight ago energy bills were an unknown and the end of that uncertainty has boosted confidence I see lenders reacting quickly no matter the outcome of the decision sion of the Bank of England. We should prepare for a flurry of very short-notice rate changes later this week and early next.

Ross McMillan, owner of Glasgow-based Blue Fish Mortgage Solutions: “As rates go up, the main area of ​​concern is people who are nearing the end of their initial fixed rates of 2, 3 or 5 years. In many cases, these initial deals will have been made at rates well below 2%, but the individuals in question will find that they have moved to a new rate of more than double. In practical terms, for every £100,000 this probably equates to an average increase in monthly payments of around £150. This significant increase, along with the general cost of living crisis, is now reaching a point where some people may need to start considering the viability of maintaining their mortgage and whether selling and downsizing is a prospect that needs to be seriously considered. While no doubt the current round of rate hikes will make some potential buyers pause and think a bit longer before moving forward with their plans, I don’t see property values ​​being drastically affected by rising mortgage rates because supply is so low.”

Mark Robinson, managing director of Southampton-based Albion Forest Mortgages: “Interest rates will undoubtedly rise again for mortgages and possibly capital release products, but people will find a way to manage them. interest starts with a 4 or even a 5, they accept it. People need a roof over their heads and rent prices are rising at the same rate or even more in some parts of the country. We don’t We can’t control interest rates, but it will certainly be essential for most people to have a good broker to ensure they get the best deal.


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