How will rate rise affect market?

The sudden hike in interest rates last week from 5pc to 5.25pc may have thrown many recent borrowers with huge loans into financial difficulties. CAROLINE CULOT reports on the reaction from estate agents.

The sudden hike in interest rates last week from 5pc to 5.25pc may have thrown many recent borrowers with huge loans into financial difficulties. CAROLINE CULOT reports on the reaction from estate agents.

. . . . . . . . . . . . . . . .

The interest rate rise was described as “extremely disappointing” by Chris Hall, immediate past president of the NAEA (National Association of Estate Agents) who said he thought it followed on too soon after the November hike.

He said: “The full effect of the rate rise in November is yet to be felt in the residential housing market.


You may also want to watch:


“This shock decision from the Bank of England is clearly premature and extremely disappointing.

“While the early indications for 2007 are that the housing market is performing well, the vast regional differences remain a concern.

Most Read

“The market in London and the South East of England which includes Norwich and Norfolk generally continues to thrive, however segments of the market are much steadier in other areas of the country.

“First-time buyers trying to get on the property ladder will rightly be devastated as affordability issues are an ever-increasing barrier on to the market.

“Stamp duty is a big enough problem, now this.

“It's not quite so bad for those who have held mortgages for many years as rates are in fact historically low; that said, to hit house buyers in the early part of the year when credit card debt doesn't warrant thinking about just emphasises the fact that decision makers are out of touch with the vast majority of middle class England.”

Antony Bromley-Martin, a partner at Strutt & Parker, said he was surprised at the rise, but did not think it would affect the housing market too badly.

“A rise in the first quarter of this year was unanticipated,” he said.

“But the Bank's decision is symptomatic of how buoyant the housing market remains, helping to raise concerns over inflation.

“It is consistent with the Bank's policy of making pre-emptive decisions to avoid having to take more drastic action later on.

“If this strategy is successful it will be good news for the housing market as we won't be seeing bigger increases in six months' time.”

A similar view came from William H Brown where divisional managing director Simon Arnes made a statement saying that although earlier than expected, the rise “would not dampen enthusiasm in the housing market.”

So estate agents remain confident that the interest rate rise won't have too much of a dramatic effect.

Become a Supporter

This newspaper has been a central part of community life for many years. Our industry faces testing times, which is why we're asking for your support. Every contribution will help us continue to produce local journalism that makes a measurable difference to our community.

Become a Supporter
Comments powered by Disqus