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What will an interest rate hike mean for house prices?

With interest rates predicted to rise, many are questioning whether this is a good time – or not – to delve into the property market.

The general consensus is that there is little to be gained in waiting to buy and that buyers should look for a property with a view to keeping it for the mid to long-term.

The Bank of England has indicated that interest rates are likely to rise before end of the year, with the next Monetary Policy Committee meeting taking place next week.

If it goes ahead, it will be the first increase for ten years and it is tipped to reverse the cut made in the wake of the Brexit vote last year to 0.25 per cent. Prior to that, the base rate had remained at 0.50 per cent since March 2009.

Now, 43 per cent of homeowners are on variable or tracker mortgages, which opens up the possibility that millions of households will see unwelcome hikes in their monthly expenditure in the lead up to Christmas.

So what would a rate hike mean for house prices?

Traditionally, higher interest means house prices are lower, and experts anticipate this will remain the case.

Higher interest rates mean higher mortgage rates, which buyers don’t want. In order to avoid a sharp jump in house prices, the bank is set to raise rates gradually, with leading economists forecasting two hikes in 2018.

However, in the near term, a looming rate hike could give reluctant prospective buyers a push.

On the other side of that coin however, is the potential for a spike in prices as buyers fight over limited stock in the run-up to Christmas, and look to lock down a cheap fixed rate mortgage before the Bank of England steps in.

While it may be hard to make a firm conclusion about the long-term implications of a rate rise, all signs point to house prices rising at some stage if rates go up.

Here to Help

Whether you are buying or selling a house, renting, remortgaging or even in a dispute with a neighbour it can prove to be a stressful time.

At McGale Kelly our experienced team of conveyancing solicitors are here to ensure that the process is as smooth as possible.

We understand that buying and selling a property can be at times confusing, especially if you have never been through the process before. That is why we are here to help remove all the stress and worries with the knowledge our solicitors will be on hand to manage your case from start to finish.

Always rest assured, the McGale Kelly team are only a phone call away offering advice and information on all matters relating to buying and selling residential property.

For further information please give us a call on 028 8224 3621 or email: info@mcgalekelly.co.uk

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