Recent research has indicated that the anticipated rise in the interest rate will have minimal impact on the property market.
Expected to be announced at 12:00 pm today, the decision whether or not to increase the rate will be made by the Bank’s Monetary Policy Committee and could represent the first rate rise in a decade.
This could have repercussions for those homeowners who have only ever had to pay low rates on their mortgages. Whilst the change will not impact those with fixed rate mortgages, it could mean a slight increase in monthly payments for those who are currently on a standard variable rate.
However, the potential rise in rate doesn’t seem to have deterred first time buyers from trying to access the property ladder. Research from Yorkshire Building Society (YBS) indicates that under 1 in 10 (8%) have been put off house hunting by the prospect of an interest rate rise.
Commenting on the hopeful picture that this figure paints was Mike Sims. The Senior Mortgage Manager at YBS stated:
“The mortgage market has been in unchartered territory for many years now and even with the prospect of rates rising it’s pleasing to see that many aspiring home owners still believe owning their own home is in reach.”
Sharing his views on the impact of the potential rate rise was Robert Gardner. The chief economist at Nationwide acknowledged that whilst an increase wouldn’t have a significant effect on borrower payments, it’s unlikely to be welcomed.
“..A 0.25% increase in rates is likely to have a modest impact on most borrowers who are on variable rates. For example, on the average mortgage, an increase of 0.25% would increase monthly payments by £15 to £665, equivalent to £180 per year.
“That’s not to say that the rise will be welcome news for many borrowers. Household budgets are under pressure from the fact that wages have not been rising as fast as the cost of living. Indeed, in real terms after adjusting for inflation, wage rates are still at levels prevailing in 2005.”
