Home buyers rejoicing at historically low mortgage rates.
The Bank of England’s decision to keep low mortgage rates has been welcomed by home buyers.
Homebuyers have been given a few more months to keep the record low mortgage rates that have helped keep the housing market booming during the pandemic, experts have said after the Bank of England held the rate down. 0.1% base.
Lenders had been upping their home loan prices in recent days amid speculation that the rate would rise to 0.25%, and many of the cheaper offers have been pulled out.
However, while there are no longer three and five-year mortgages for sale at interest rates below 1%, borrowers with large deposits still have a wide variety of loans priced below 2%.
Experts said that while the cost of debt remained near record lows, house prices are unlikely to fall. However, activity and growth would slow down as the increases lower the disposable income of borrowers.
“While the best deals may be history by now, the decision not to raise interest rates will give home buyers a greater opportunity to secure the low-interest rates that have given oxygen to the booming housing market for the past 16 years months”, said Lucian Cook, director of residential research at real estate firm Savills, said.
“With the stimulus of a stamp duty holiday behind us, any increase would be expected to contribute to a slowdown in growth and price activity over the next 12 months.”
David Fell, a senior analyst at the Hamptons real estate firm, said recent increases in the cost of mortgages “would remind buyers that rates are not just moving in a downward direction.”
However, he added: “For the average first-time buyer, the current upward pressure is likely to amount to tens rather than hundreds of additional pounds in monthly mortgage payments. I don’t think it makes much of a difference in most people’s buying decisions at this stage.”
Dominic Agace, chief executive of real estate chain Winkworth, said speculation about rising interest rates had not affected prospective buyer sentiment.
“The market has naturally cooled down since the end of the stamp duty, but with such a low base for mortgage rates and a small proposed increase in interest rates, this has not altered buyers’ outlook,” he said.
Stamp duty holidays across the UK have fueled an already busy market as people made lifestyle changes after the first pandemic shutdown.
When the final phase of the tax exemption came to an end in England at the end of September, sales slowed, but recent house price indices have shown that price growth has continued.
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