With the Bank of England deciding again in March to leave interest rates unchanged, the majority of economists predict a rate increase is on the horizon in the near future.
What do rising interest rates mean to you and the property market?
With the massive amount of borrowing that takes place in the global property market, a change in interest rates can have a significant impact on the market.
- Increase in cost of borrowing.
- Increase in savings rates.
- A decrease in affordability.
- Potential decrease in liquidity in the market.
- A potential for a slowdown in price growth.
- Increase in development costs for non-cash developers.
- Demand for higher yields from investors.
- Potential for governments to spend less due to increased costs of spending.
- Likelihood of an increase in currency value.
What will this mean for you?
The potential slower rates of sale could allow for more dealing margin when buying. However, keep in mind your mortgage will be more expensive so either secure a fixed rate before an increase or adjust your budget accordingly.
Mortgage rates will rise along with interest rates so if you are considering refinancing, get that sorted sooner rather than later and try and secure a long, fixed period on your rates.
Secure your lending agreements, confirm fixed fees and interest rates. If you are looking at new projects, do include the higher expected borrowing costs into your budgets and proposals.
Make sure your investments make sense at higher interest rates, ensure your spread is still where you want it to be. For any new acquisitions, plan for the higher rates and ensure they investments work for your requirements.
We can delve into far deeper discussions on this topic, and if you would like to, I would be happy to talk it through with you.
A steady increase in interest rates over coming years will be an exciting change to the market.