Commenting on the predictions of leading economists that a rise in interest rates may be imminent, Rob Clifford, commercial director at property specialist SDL Group, said:
“I’ve no doubt that a hike in rates will happen but I question if it’s going to have the negative impact many believe.
“With inflation currently at three per cent, above the MPC’s two per cent target, it’s inevitable that the Bank of England will look at a further rise in rates to try and push inflation down. It’s something that’s going to happen and, arguably, all of the signs suggest that it’s a move consumers are anticipating.
“Look at the rise in the number of remortgages we’re seeing compared to purchase mortgages. In fact, one major lender told me recently that whereas the split had been around 50/50, it’s recently switched to being 90 per cent remortgages and 10 per cent purchase mortgages. Many in the market would have predicted a growth in remortgages but perhaps not quite as quickly as we’re seeing.
“It doesn’t matter whether we’re talking about the residential or buy-to-let market, the fact remains the same that consumers want the certainty of a fixed rate and the best deal they can get. Consumers are ready for a rise and they’re quite literally getting their house in order.
“However, my opinion would be that this isn’t going to have a major impact on the market as a whole, and that’s because it isn’t actually affordability that’s causing a bottle-neck. The major barriers remain in the capital required for the initial deposit and overall availability of stock. A further rise in interest rates isn’t going to change that and I can’t foresee it having much of an impact on purchase volumes.”