The sharp rise of interest rates. Why? What about property?
It will take time; however, the interest rates have risen to help bring inflation back down. There is no immediate impact, inflation is higher than the expected target at the moment, mainly due to the increase in cost of energy and goods coming in from abroad. It is down to interest rates to help bring inflation back to the target of 2%.
The Bank of England has increased rates since December 2021 from 0.1% to 1.25%
There is no way of telling how high these rates will go or any way of knowing the impact and effects on inflation over the next few year, it all comes down to the economy. The BoE does say it is unlikely that rates will reach the historic very high levels we saw in the past.
For some, this may be a benefit, and encourage people to save but there always comes a downfall, monthly repayments will rise for mortgage owners and first-time buyers will have to dig a little deeper. The younger generation of homeowners have only known interest rates at their lowest. This current uncertainty will cause worry to many.
Our Residential Property Manager, Lisa, comments: “Rents are already at an all-time high and stocks are low. Higher interest rates will increase the market for rental properties because fewer people will qualify for mortgages.”
According to research by Knight Frank and Oxford Economics, servicing a mortgage is expected to rise to 30% of income by 2026.
As debt costs increase this could have a negative impact on both residential and commercial property values.
For advice or guidance please on valuations and property management do not hesitate to contact any of our professional team on 023 8022 2292 or 01202 887 555.