Return to a buyers market

Increased market supply as sellers look to realise gains

The Monetary Policy Committee have increased interest rates by a fifth time in as little a year to their highest level for more than six years – in a move to bring inflation back in line with the Bank of England’s 2 per cent target.

The widely expected increases are likely to accentuate the slowdown in property price growth that has been evident since the last base rate rise. It is also expected to drive more properties to market as sellers try to lock in gains.

This latest rate rise is likely to reinforce the weakening in demand for housing, which in turn will feed through into slower house price inflation over the second half of the year. With evidence of increasing amounts of new supply coming to the market, sales volumes are set to decline and we could well see the return of a buyers’ market over the next six months.

The Council of Mortgage Lenders estimates that 2m borrowers will come off competitively-priced fixed-rate deals over the next 18 months to be met with sharply increased monthly repayments.

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