By Allan Fuller
It was in March 2000 that the interest rate was reduced to 0.1%. Today’s announcement of the rate at 3% is a big increase from that virtually zero level, it does echo changes around the world with the same ¾ of a point in the USA as countries try to damp down inflation.
The rate has been increasing since December 2021 with a significant series of increases in recent months in an attempt by the Bank of England to control inflation. What we need now is a period of stability in rates making it easier for us all to make future plans.
For property, this means that those with a floating rate of interest on their mortgages will have yet another increase this year. Anyone on a fixed rate needs to check how much longer that lasts before they also go to a floating rate.
When considering the housing market overall a fact that is often ignored is, according to The Office of National Statistics, of owner occupied homes, more than half have no mortgage.
The property market always slows as we get this close to Christmas, therefore the question really is what will be happening in 2023? Property values have risen considerably in the last few years, so a slow down at some point is inevitable. Reports from some areas of a dramatic drop in values is thought to be over dramatic.
We are not in a major recession with vast unemployment, quite the reverse we have extremely low levels of unemployment. The greatest likelihood is that it will be a calmer market with some slight correction to property prices, this will actually make buying and selling less frenetic.
My essential advice for anyone with a mortgage who may be getting into financial difficulty is that they must contact their lender as soon as possible rather than ignore the issue. Lenders do not want to be re-possessing your home, they will discuss your situation and work with you to find a solution.