Experts have issued advice on how the projected interest rates will likely affect house and rent prices in the coming months.
CMC Markets experts predict interest rates (currently 1.75%) will rise again to 2.25% in September, which coupled with still-soaring inflation would be bad news for buyers, landlords and renters.
However, after analysing June’s latest data, they believe house price rises are likely set for a temporary slowdown – good news for those waiting a little longer to buy.
House price rises slowing down
Chief analyst Michael Hewson said: “Despite the soaring inflation and rising consumer prices across the board, UK house prices appear to be trailing behind because demand for homes has generally come to a screeching halt.
“Most buyers are weathering the storm for a few more months at least, while some are also working out how the cost of living crisis will pan out in the medium term.”
He pointed to houses sold in June 2022 only increasing in price by 1% compared to May, while last year the same period saw a 5.7% surge.
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But Mr Hewson urged caution, adding: “Remember, house prices may be slowing down, but they are not decreasing.
“Importantly, since this is transactions data processed at the time (in June), it does not take into account the big leap in interest rates that the Bank of England announced later that month, let alone the even bigger hike in August.”
But what about those still keen to buy now?
For those keen to get on the property ladder, there are plenty of fixed-rate banking products that can insulate them from spiralling interest rates on mortgages.
They should, however, prepare for the possibility of higher-than-expected repayments once the fixed rate period expires.
“Fixed rates are not the cure-all either, as they may now be set to a higher level to start with,” Mr Hewson added.
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