Last week’s Bank of England interest rate rise to 0.75% should have little effect on the property market, according to a number of agents. Whilst some lenders have increased their rates accordingly, interest rates remain historically low for residential and commercial mortgages, and many short-term lenders may not increase their bridging loan rates.
A borrower with a £200,000 mortgage will pay an extra £300 a year. This level of increase is unlikely to put people off purchasing property
The Governor of the Bank of England, Mark Carney, has hinted that rates could rise further within a few months. This could cause some people on variable rate mortgages to switch to fixed rate deals. Many people could feel an urgency to secure a new fixed-rate mortgage before rates go up again.
There is a lack of housing stock in Britain and this has kept house prices high. Many people who want to purchase their first home cannot afford to do so and will remain in rented accommodation. There are investment opportunities for buy to let landlords. Buy to let commercial mortgage repayments will rise slightly but not to the level where they deter landlords from investing in new property. There are many lenders offering good mortgage deals for landlords. Some of these mortgages are especially suitable for first time landlords.
Borrowers who want to switch to a fixed rate mortgage or find a cheaper interest rate should consult a mortgage broker to find the best available mortgage rates.