Potential interest rate rise would have 'dampening effect' on house buying decisions

Pressure on the Bank of England to pause interest rate hikes is building after official figures showed a surprise easing of UK inflation last month.

Business groups have joined the calls on policymakers to keep interest rates as they are ahead of the latest decision, due to be announced tomorrow.

And reflecting on the prospect of any future rise, Russell Griffin, MNAEA director of Samuel Wood in Shropshire, said: “The property market in some parts of Shropshire has experienced a reduction in confidence in recent months. Our market has transitioned from a buoyant state to a steady, level, playing field.

"This shift has been driven by various economic factors, which in turn affects buyer sentiment. The expectation of a future increase in interest rates will have a dampening effect on some buying decisions.”

Mr Griffin said Samuel Wood is providing advice to help Shropshire clients navigate this price-sensitive, market as traditional “time served" experience becomes very important.

"I have experienced many downturns in my 35-year property career, market adjustment is always to be expected," he added. "The skill is to assist prospective buyers who remain pragmatic and make their purchase decision on finding a home rather than focusing on just the financial transaction.

"Historically, property values perform extremely well as Shropshire has always been a desirable country, long before the race for space hit the national press!”

Adrian Newling-Goode, co-director of Hilltop Mortgage Solutions, based in Wellington, said, ahead of the Bank of England’s next interest rate review that it would be "a tough call" on whether they put rates up again to 5.50 per cent or break the cycle of 14 consecutive increases since they started in December 2021.

"If the Bank does raise interest rates, what this will mean to most mortgage customers and homebuyers will depend on their individual circumstances," he said.

"Whilst we have seen rises in the Bank of England rate over the last year, conversely lenders have been reducing their Fixed rate products by some considerable margin.

"These rate reductions, along with Government and lender initiatives, are all ways in which the industry can try and support customers and ensure that they know who to turn to, should they need any financial guidance or help.

"The impact of another potential rate rise will make some people ‘pause’ before making the decision to move home, but due to personal situations such as relocation, expanding families, separations, and people downsizing, there are just as many clients that need to make changes regardless of what is happening to interest rates.

"For those looking to move home, the need for good honest advice has never been so important. Mortgage advice from an experienced qualified broker, like ourselves at Hilltop Mortgage Solutions to ensure that you have an affordable mortgage product that is tailored to your individual circumstances, to a trusted estate agent with extensive knowledge of the local area to ensure that you are best placed to make the informed decisions that you need and help ensure that your next move is a successful one.

"With regards to a potential interest rate rise, clients who currently have a Fixed rate do not need to worry as their monthly payments will not increase until their initial Fixed rate period comes to an end. Our advice at Hilltop Mortgage Solutions would be to speak to a mortgage professional approximately six months before your current deal expires to look at your options and potentially secure a new Interest rate in preparation.

"Any client who has a ‘variable’ type mortgage, such as a lenders standard variable rate, a tracker rate or a discounted rate, we would advise that it would be prudent to review their options to ensure that they have the best deal available for their individual needs and requirements.”