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Antony Antoniou – Luxury Property Expert

Has the Bank of England’s Rate Hike Reached Its Peak? A Closer Look at the Property Market

Has the Bank of England’s Rate Hike Reached Its Peak? A Closer Look at the Property Market


The recent decision by the Bank of England to increase interest rates from 5% to 5.25% has triggered discussions and speculations among agents and property professionals. This marks the 14th consecutive rate increase, with the last time the base rate reaching 5.25% being over 15 years ago in February 2008. However, there is hope among some experts that rates might have peaked, as this increase was smaller than the previous one.

**Are Rates Stabilizing for the Housing Market?**

Richard Donnell, the executive director of research at Zoopla, suggests that despite the increase, there’s reason to remain positive about the housing market. With 87% of mortgages currently on fixed rates, there are indications that mortgage rates may be nearing their peak. The impact of these rate changes is not uniform across the UK, with higher-priced markets in Southern England experiencing more significant effects due to the larger deposits and incomes required to secure mortgages. In contrast, regions like the north of England and Scotland are seeing less pronounced impacts, with house prices continuing to rise.

**Hope Amidst Fixed-Rate Mortgage Deals**

Tom Bill, head of UK residential research at Knight Frank, believes that the rate hike was already priced into fixed-rate mortgage deals, ensuring they remain unaffected. This trend suggests growing confidence that the bank rate might be nearing its peak. The return to a more normalized interest rate environment after the prolonged era of ultra-low rates in the last 14 years might have some bumps, but it is increasingly seen as a deviation from the norm.

**Mixed Signals for the Housing Market**

While some lenders are cutting rates and inflation is falling, there is cautious optimism in the housing market. However, the downward pressure on prices and transaction volumes may continue as more people come off fixed-rate deals. The market is not in dire straits, but subdued demand is anticipated until the next election.

**Buyers Adjusting to Higher Rates**

Matt Thompson, head of sales at Chestertons, emphasizes that higher interest rates are prompting buyers to adjust their budgets. Homeowners with variable mortgages and over-leveraged buy-to-let investors might see diminished returns due to increased mortgage payments. While there is still substantial demand from buyers, the rising interest rates have led house hunters to approach the market with greater caution and financial prudence. As a result, there may be a temporary slowdown in new buyers entering the market. However, activity is expected to rebound as buyers adapt to their new criteria and lenders offer more products.

**Hope for Homeowners and Fixed Mortgage Rates**

Phillip Nelson, a research officer for Propertymark, sees the recent interest rate increase as expected, providing hope that rates may soon peak. For many homeowners, this is a positive sign, and there is the possibility of fixed mortgage rates starting to decline.


While the Bank of England’s rate hike has raised concerns, there are indications that rates may have reached their peak. The impact of these rate increases varies across regions, affecting some areas more than others. However, with lenders adjusting their rates and inflation falling, there is hope for the housing market’s future. Although there might be a temporary slowdown in activity, experts believe that the property market will ultimately rebound, offering new opportunities to buyers and homeowners alike. As the economy continues to evolve, it is essential for property professionals and individuals to stay informed and adapt their strategies accordingly.

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