Response to Interest Rate Rise: Nick Leeming, Chairman at Jackson-Stops

"On the same day that inflation has reached double figures, a slight sense of restraint is starting to creep into the property market. The impact of the higher cost of borrowing and less consumer spending power is likely to gradually filter through over the rest of the year. For now, an expected seasonal dip in activity over the summer months should remain front of mind before we declare a market adjustment. Committed buyers and those at the higher end of the market are remaining resolute in their bid to be moved in by Christmas, helping to maintain house prices far above the levels we would have expected to see prior to the pandemic.

Nick Leeming, Chairman of Jackson-Stops, comments: “It seems the world never sleeps when it comes to property. In the week that Lee Rowley has been announced as the new Housing Minister and a Stamp Duty tax reform seems to be at the top of the Chancellor’s agenda for tomorrow’s mini-Budget, this afternoon the Bank of England has raised interest rates to 2.25%.

“Our current era of historic low rates set an inevitable path for indices to predict an upward spiral in rates to tame the market, so many saw and planned for this impending increase. Longer term fixed mortgage deals remain available, with many buyers keen to get on with their move after years of instability caused by the pandemic.

“Inevitably, those who aren’t yet on the ladder and who don’t have a capital asset to benefit from are always hardest hit by such announcements, and it may cause those at the lower end of the market to revaluate their budgets. This shift in monetary policy is also adding a sense of urgency to current transactions, as mortgage providers cope with a backlog of applications, but its effect on property values won't be fully reflected in the price indices for several months to come.”