Homeowners are warned of interest rates increase
11:02am Saturday 12th July 2014 in News
ESTATE agent Strutt & Parker has issued timely advice to homeowners about how to prepare for an interest rate rise.
Although there is still uncertainty about when a rise will come, commentators are generally agreed that there will be a rise from the record low of 0.5 per cent as a way of cooling the over-heated housing market in London and the South East.
Many expect the rise by the Bank of England is likely to be rolled out in gradual stages in early 2015.
Simon Merton, partner at Strutt & Parker’s Moreton in Marsh office said: “Paying back more will impact on the disposable income of households. I would advise homeowners to set aside savings and go through your outgoings to ensure you are ready for any climb in your mortgage repayments.”
However, interest rate rises might not be all doom and gloom for the long term property market.
Merton believes an increase in mortgage rates will encourage many sellers who are sitting on the fence to become more focused on their sale.
He said: “This would bring in more supply from enthusiastic, committed sellers and in turn encourage more market activity.”
Merton added: “The current national market is quite tightly defined by certain areas where demand outstrips supply and is driving house prices up. But there are also many areas, not only outside the South East, that need supply to be improved by more motivated sellers.
“Before a rate change comes into place, if your property is sensibly priced and carefully marketed, now would be a good time to sell your home while market confidence remains high.”
The UK’s sharp economic rebound in the past year has been largely stimulated by Government led housing schemes like Help to Buy rippling through the property market.
Critics argue this has left a surplus of buyers driving house prices into a ‘bubble’. The Royal Institution of Chartered Surveyors warned house price rises could become unsustainable in some areas, reporting a six-year high in the number of UK homes that have sold.
Although British house prices continue to increase, the Bank of England predicts this rate to be steady and robust until mid-2015 as part of a broader upturn in housing market activity.