INTEREST RATES IN PERSPECTIVE

Why This Is A Buyers Market

The Bank of England base rate was held at 5.25% this week with the next rate review taking place on the 2nd November.

Held thanks to the UK’s annual inflation rate slowing to 6.7% last month amid weaker growth in food prices as well as monthly falls in the cost of hotels and air travel. The City, City economists and media had reportedly expected a slight increase to 7% because of rises in fuel prices.

This latest fall; from 6.8% in July; marks the sixth straight monthly fall in the headline rate.

It does not, however, mean that prices are actually falling. It simply means that they are rising at a slower pace than before. This also applies to property prices - property price inflation is falling but only in London and the South West are they are actually falling.

https://landregistry.data.gov.uk/app/ukhpi/browse?from=2022-08-01&location=http://landregistry.data.gov.uk/id/region/united-kingdom&to=2023-08-01&lang=en

The Land Registry chart below shows the gradual fall in house sale price growth since August 2022. Given the delays in deal to completion - August data is really deals struck in May or June so we expect further falls into negative over coming months. Our two most recent deals struck in July and August were both double digit below market value and as neither has completed will not be reflected in this charts latest land registry figures. We believe it's certainly a buyers market and an opportune time to strike deals.

Certainly, rising interest rates have given everyone a shock after so many years of historically low rates but at the current rate of 5.25% we still have it good by historical standards. There may be further rises but the fall in interest rates appears to have stalled the inflation levels and this is a good time to buy - there will be motivated sellers. After all it was too much to expect rates to stay so low for ever and as the chart below shows we are paying far less than historical levels.

https://www.mortgagestrategy.co.uk/analysis/historical-interest-rates-uk/

Don’t wait for the bottom - that could be too late. When sentiment shifts near the bottom, sellers will prefer to not strike quick deals but let the property sit on the market to gain the price they want. Buy well on the way down like many people post 1989 and 2008.