With an abundance of information in the marketplace about inflation, base rates, and mortgage costs we caught up with our Head of Residential & Rural Agency, Alasdair Dunne, to find out his view on the current residential market and how these challenges affect home buyers and sellers.
“If you are thinking about moving house, you may well be carefully watching out for information on inflation rates, Bank of England base rates, and the subsequent impact on interest rates and mortgage costs. Inevitably, high interest rates and therefore mortgage costs subdue the housing market and undermine both the ability and confidence to move.
“Borrowers need rates to come down but understand this can only happen when inflation rates are falling. The Bank of England has to walk a very fine line between controlling inflation and creating a recession, in other words, slowing consumer spending but not stopping it.
“The latest indications are that the balance is about right. Base rate rises have inevitably slowed inflation and the balance between recession and growth is on a knife edge, but just leaning toward growth. Lenders now appear to be increasingly confident that the worst of the inflationary pressure has passed and are releasing mortgages on more affordable terms.
“So, how does that affect home buyers and sellers now? Borrowing money is more expensive than it has been, but as affordability improves, people can pursue their home-moving plans more confidently, and they are.
“Our current experience is that whilst there are fewer people actively looking to move home, those who are, prove to be active and committed. The number of properties being offered for sale is nicely balanced with demand and sales are being quickly agreed upon where the pricing strategy adopted is sensible and justifiable. We know that people are taking a longer-term view of their finances, with mortgages agreed over increased time frames with more reliance on tracker mortgages suggesting some confidence that rates are set to fall further.”
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