Survey finds that 53% of brokers believe that Bank Rate would have to hit 3% before the UK property market is negatively impacted.
Just under one in five brokers think an increase in interest rates to between 1% and 2% would be sufficient to damage the UK housing market, the survey commissioned by United Trust Bank also revealed.
SME builders and developers were seen to be relatively secure as well; the survey found that over two thirds (78%) of brokers felt that an increase in Bank Rate to 1% would not have a detrimental effect on this type of business.
Noel Meredith, executive director of United Trust Bank, said:
“What’s interesting about the results of this survey is that the vast majority of brokers working with developers think that the Bank of England will need to increase its base rate to what many experts believe will become the new ‘normal’ in order for it to have a negative impact on the property market. We have become used to having very low interest rates and although an increase from 0.5% to 3% sounds like a big leap, it’s very unlikely to happen quickly and clearly many brokers feel that there’s enough demand for the supply of new housing to keep buyers buying even if mortgages do become a little more expensive.”
“Speculation about increasing interest rates has come and gone periodically for around the last 18 months. It’s no surprise therefore that the majority of developers active today have structured their finances in such a way as to be prepared for when higher interest rates inevitably come. Whilst the first increase in the base rate in what will be more than 80 months will send a slight tremor across the industry, it certainly won’t come as a surprise and I am sure it’s not going to cause many developers or their brokers to lose much sleep.”