0.25% Base Rate Rise – What Next?

Rates Rise – but don’t panic.

At midday today, as widely predicted, the Bank of England announced an increase in the base rate from 0.25% to 0.5%. The base rate had never been lower and this is the first rise in over a decade.

If you are a tenant or a home-owner under the age of 30 this might be the first rate rise you have ever dealt with.  For those of us who are a bit older, a bank base rate of 0.50% will still seem ridiculously low.

The question you are likely to be asking is what does it mean for mortgages, house prices and the market outlook generally?

Here’s our view:-

Mortgages:

If you are on a fixed rate you won’t see any change, but if your current deal ends soon the next one might be more expensive.  Lenders have already taken action in recent weeks to re-price their mortgage products so people in the middle of a move probably also won’t see any changes to the deal on offer.

If you’re on a variable rate or a tracker your payments will rise, probably by 0.25%. However, to put this in context, a 0.25% rise is likely to cost only £200/yr more per £100,000 of mortgage.

We have a great mortgage cost calculator on our website and our independent expert mortgage advisor can give you access to the current and best deals!  So why not call us and take 5 minutes to check your current rate?

We may well be able to save you money even though mortgage rates are ticking up.

House Prices:

House prices in our local area are stable with some gentle increases occurring in the most popular family homes segment of the market.  We don’t see that position changing as a result of this small increase in interest rates.  The rate rise is not significant for most buyers and rates remain very low by any historical measure.

We see prices continuing to edge up next year as a shortage of stock underpins strong demand from both local  buyers and those from London, the Home Counties and further afield.

Did you know?  You can now check the likely current value of your property by using the Clarkes on-line house price calculator on our website.  It takes just a minute or two to use the tool and it is completely free.

Click HERE to value your house.  You might get a pleasant surprise.

The Market Outlook

The Bank of England has signalled that further rate rises are on the way over the next year.  In reality that might well mean bank base rate being up to 1% by the end of 2018.  Many experts think the rises will not come that quickly – we will all have to wait and see.

The Bank was keen to stress that rate rises will be ‘gradual and limited. We don’t think that any small rises in rates will change the fundamental housing market outlook at all.

Brexit is also having little or no effect on the mainstream market.  People are wisely just getting on with life and it remains a good time to sell for most vendors, providing they price realistically and get the marketing right.  That means choosing the right agent.

So, the market outlook in our opinion is ‘steady as she goes’.  It’s a bit of a boring prediction in many ways, but we think it’s the best one for everyone here on the coast – whether you are buying, selling, renting or investing.

If you are thinking about a move in 2018, why not get a valuation of your property now and get ahead of the competition?

 

Our expert valuations are FREE, without obligation and will include a full analysis of the local market in your area.

 

Just give us a call on 01243 861344 to book your appointment.