Aaron Dodd, Branch Manager/Valuer in our Barnard Castle office looks at the property market and the impact of recent announcements on inflation and base interest rates.
With the news this week that inflation fell to a rate lower than the financial experts had predicted and the expectation that it will fall again in the coming months all eyes are firmly on base interest and mortgage rates.
Despite the Bank of England base rate recently being increased to 5% with the subsequent impact on mortgage rates seeing the average two-year fixed residential mortgage set at 6.81% and the five-year rate at 6.33% (twelve months ago rates were nearer 3%) impact this has had on mortgage interest rates over the last few weeks appears to be negligible.
Rightmove statistics report that the recent increase in the interest rates has had little bearing on buyer demand which has been 6% higher over the last few weeks compared to the same period in 2019’s more ‘normal’ market. Average new seller asking prices have also reportedly fallen by £82, effectively stabilising, this month to £372,812. This is the first monthly drop in asking prices this year to date, and is also the first drop seen within the month of June since 2017.
The immediate impact on activity appears to have been limited to date, with the majority of home movers still determined to carry on if they are still able to afford it, however, there has been a significant jump in those utilising mortgage/affordability calculators in recent weeks, ascertaining the potential costs and whether it is still viable for them to move.
Financial predictions that inflation will continue to fall during 2023 are welcomed but the Bank of England and the Government are keen to see inflation fall in line with Eurozone and US markets (currently 5.5% and 3%). In turn, the expectation that the interest base rate may reach 6% before the end of the year has been pulled back slightly to 5.75%.
All eyes will understandably remain focused on the various facets of 'cost of living' but at this time the property market relatively speaking remains active and owners who work with their agent to price sensibly are seeing good results in terms of price realised and speed of sale.
If you require any advice regarding the sale of your property, please feel free to contact your regional office on 0333 920 2220.