05 Aug WHAT WILL BE THE EFFECT ON THE MARKET OF THE RISE IN INTEREST RATES?
We don’t expect it to have any appreciable effect on the market. The market has slowed a little because of the onset of the holiday season, but active buyers will not be put off. It will only have a moderate effect on mortgage rates and building societies are being encouraged by Government to be more flexible with applicants, removing the need for financial ‘stress testing’.
Interest rates are still at historically low levels, they have in the past been at up to 15%. The Bank of England take a measured and ‘conservative’ view and do not make some of the more extreme interest rate moves that some countries do.
Interest rates have only a moderate effect on inflation, which at present is caused more by outside influences, such as gas and fuel prices, transportation and food costs and shortages. These will pass.
Whichever candidate becomes Prime Minister, they will have a progressive attitude towards growth in the economy.
Compare house prices with gilt edged investments in the stock market, even if they drop temporarily, they will always pick up again in due course and move forward. A house purchase is a long term investment, people will rarely resell within a short time. It is usual to live in a property for 3-10 years or more and fluctuations in values may happen to a limited extent, but they are guaranteed to go up in the medium to long term, helped ironically, by inflation.