Interest rates! What’s happening and why?

Interest rates have a significant impact on the property market in England. They can determine how much it costs to borrow money to purchase a home, which can in turn affect the supply and demand of properties, and ultimately impact property prices. In this blog, we will explore how interest rates affect the property market in England.

Firstly, it is important to understand what interest rates are. Interest rates are the amount of money that is charged by a lender for borrowing money. In the context of the property market, interest rates refer to the rate of interest that is charged on mortgages.  When interest rates are low, it becomes cheaper to borrow money to purchase a property. This can increase demand for properties and as a result, push up property prices.

On the other hand, when interest rates are high, it becomes more expensive to borrow money to purchase a property. This can decrease demand for properties, and as a result, push down property prices. Higher interest rates can also lead to an increase in the number of people who are unable to afford to buy a property, which can reduce demand for properties and lead to a decrease in property prices.

Recent interest rate rises in England have indeed caused house prices to come down, with many experts suggesting that they have already droped an average of 6% from where they were at the height of the market last year.

Interest rates in England have recently hit highs due to inflation rates soaring to around 10%, which is significantly above the Bank of England’s target of 2%. As a result, the housing market in England has been impacted, with house prices experiencing a decline.

The Bank of England’s Monetary Policy Committee (MPC) is responsible for setting interest rates in the country. One of the key factors that the MPC considers when setting interest rates is inflation. When inflation rises above the target rate of 2%, the MPC may raise interest rates in an attempt to slow down the economy and reduce inflationary pressure.

However, it is worth noting that the impact of interest rates on the property market is not always straightforward. Other factors, such as the supply of properties, the state of the economy, and government policies, can also have a significant impact on house prices.

At Abshot Estates, we pride ourselves on our deep knowledge and understanding of the housing market. Our team of estate agents has worked in various market conditions and has the expertise to provide tailored advice to our clients, regardless of the current state of the market.

We understand that the decision to buy or sell a property is a significant one and can be impacted by various factors, including interest rates and inflation rates. Therefore, we take a holistic approach to our advice and provide comprehensive guidance on all aspects of the housing market, from valuations and marketing strategies to negotiating deals and providing legal support.

At Abshot Estates, we are committed to providing personalised, professional, and transparent service to our clients. Whether you’re a homeowner looking to sell your property or a prospective buyer seeking your dream home, we are always on hand to provide expert guidance and support throughout the entire process.

Jack Jowett

Jack Jowett | Managing Director