Interest rates rise to five percent
The Bank of England has just raised interest rates to 5%, a 0.5% rise. This is the 13th time that interest rates have risen since December 2021, with the increases occurring to help tackle rising costs of living.
It comes after the news yesterday that the Headline Inflation figure continues to sit at 8.75% for the second month in a row.
The theory behind the interest rates rise is to make borrowing more expensive, therefore making people spend less and bringing demand down and therefore ease prices overall.
Those on a mortgage deal linked to a variable rate will be most impacted by this latest rise. This is around 15% of mortgage holders, considerably less than the 70% that was the norm 20 years ago. The longer term impact of these rates rises will be felt by those looking to remortgage or take out a new mortgage in the coming months.
It is inevitable that this has an overall impact on the perception of the property market, with the increased costs of borrowing impacting mortgage rates.
Despite this ongoing pattern of rates rise, we are still seeing the resilience of the property market in Edinburgh, the Lothians, Fife and the Borders with good interest from home buyers and sellers. Whilst sales volumes are down against last year, the average house value is up 0.9% and four out of five sellers are achieving their Home Report Value or higher, with the average premium being 103.3% of the Home Report Value.
With properties taking longer to go to under offer, there is increased choice for buyers ensuring that they can select properties that best meets their criteria.
In addition, sales prices are also stabilizing from the large increases seen over the last few years. These premiums easing is good news for home buyers and for those moving up the property ladder to a more expensive property.
Paul Hilton, CEO at ESPC said: “The right strategy for buying or selling will be more important than ever. The depth of experience across the ESPC Solicitor Estate Agency network is unparalleled, many key personnel at firms will remember the 15% interest rates of 1992. With all that experience, no one is better placed to guide you on your next move than an ESPC Solicitor Estate Agent.
"ESPC Solicitor Estate Agents are immersed in the market on a daily basis, be that selling or offering on properties for clients - no one is more in tune with the local nuances and impacts on individual buying and selling needs."