Interest rates, which have been at record historic lows of 0.5% since the 2008 global financial crisis, are finally expected to rise 'by the turn of this year'.
Mark Carney, the Governor of the Bank of England, announced in a speech earlier in July that the decision to raise interest rates was likely to come into 'sharper relief' at the end of 2015.
While higher interest rates will have savers jumping for joy after years of seeing their returns diminish, the move would be less pleasing for borrowers, who would have to pay more on their mortgages and credit card bills. There is also concern over the impact higher rates could have on the housing market.
According to Carney, the base rate will increase slowly over the next three years and peak at roughly 2.5%. He also assured worried borrowers that any rate rises would happen slowly and would depend entirely on the latest data.
House prices hit a record high last month, with property owners and buyers reacting positively to the surprise Conservative election win at the beginning of May. Borrowing went up at its fastest rate in seven years. This was mostly down to pre-election jitters as people waited to see the outcome of the election before putting their plans into action.
The worry is that higher rates will stall activity in the housing market and hinder demand as buyers would be deterred by the extra interest they would have to pay on their mortgage.
However, the prospect of a rise isn’t necessarily bad news for property sellers – in fact, quite the opposite. Buyers, with the goal of achieving more favourable mortgage rates in mind, will be eager to move before rates go up.
This means, rather than umming and aahing and going to a hundred different viewings to find their dream home, they will be looking to act more decisively. This is, of course, excellent news for sellers. A larger pool of potential buyers increases a seller’s chance of getting their asking price or above.
More good news for sellers came in the form of the National Association of Estate Agents (NAEA) monthly housing market report for June. Currently, housing demand is at an eleven year high, with 439 house hunters registered on average per NAEA member branch.
The market, as expected, slowed down during the run-up to the General Election, but it soon came back to life after the pre-election uncertainty disappeared. The shackles were effectively removed as buyers felt more confident to push ahead with the plans they’d put on hold.
Mark Hayward, managing director of the NAEA, said of the recent surge in demand: “Buyers are feeling more confident and those who put their plans on hold over the Election and political aftermath have kicked off their hunt, causing this massive jump in demand. There’s also an impetus to buy right now in light of the impending interest rate rise as buyers fight to buy and fix mortgage rates.”
The threat of the interest rate rise, even if this won’t take hold for a while yet, has been enough to give buyers a shot in the arm to start their house search in earnest.
At Sarah Beeny’s Tepilo we’ll do all we can to get your home sold. From the moment you upload your property to our website through to completion, you’ll have a dedicated, fully trained sales manager at your side every step of the way.
We have a 24/7 phone service available if you need any questions answered or expert advice, while we can arrange viewings on your behalf at a suitable time for both you and your prospective buyer. That's not to mention notifying you every time you get a viewing request, receive a message or have an offer placed on your home.
If you would like more information about selling with Tepilo, please contact us on 0844 3878377 or 01702 870878. Check out our fees page to see how much you could save by instructing us to sell your home.