Time is running out for buyers to lock in deals
The property market has welcomed last week’s decision by the MPC not to raise interest rates, despite the rise in inflation to 3.1%, but most experts believe that time is running out.
“Holding BBR at 3.75% feels like the right decision, although the inflation figures underline just how much pressure is now building on the MPC,” said Steve Cox, chief commercial officer at Fleet Mortgages.
Ben Allen, managing director of The Right Mortgage & Protection Network, said it was now a wait-and-see game. “Maintaining BBR at 3.75% at least avoids adding further pressure to borrowers on tracker, discounted and variable rates, but attention will now turn to swaps, the future inflation outlook and, of course, the Budget next month and accompanying OBR forecast, as the country waits to see what those might mean for households, the economy and ultimately the mortgage market.”
For how much longer?
John Phillips, CEO of Just Mortgages and Spicerhaart, also believes the MPC will soon be forced to increase the rate. He said: “Even with the news on inflation, a hold feels like the right call for now. For how much longer, though, is the crucial question.”
However, he said he was encouraged to see a modest jump in buyer registrations and listings so far in September, as well as buyers and homeowners reviewing their mortgage options. “While rates are changeable, there is still plenty of money out there in the market and lenders willing to lend – particularly as we edge closer to their end of year targets. That fact alone could very well encourage some positive activity,” he said.
Meanwhile, Simon Gammon, managing partner at Knight Frank Finance, said buyers and homeowners should react rather than wait. “We’re advising borrowers to lock in a rate as soon as possible – most deals can be renegotiated should borrowing costs fall,” he said.
But Ryan Etchells, chief commercial officer at Together, doesn’t believe everyone will do this. “The prospect of rate rises could provide an incentive for prospective home-buyers to move forward with plans and lock-in rates before any future rises. However, many will also be minded to wait and see if the situation improves in the short term.”
