I don’t want to sound like Corporal Jones in Dad’s Army but the message after the Bank of England raised base rate to three per cent is “Don’t panic!”.
Pundits who were probably still at school when mortgage rates hit 15 per cent after Norman Lamont’s Black Wednesday debacle 30 years ago will tell you that the new base rate rise of 0.75 per cent is a disaster. True it will cause some financial pain in the immediate future but the residential market has seen worse and will see better times again.
Our trouble is that we have got used to a diet of cheap money. It was the source of that Covid-19 bail out which is now costing the Government billions of pounds a month in interest charges. Everyone got swept up by it and for a time we will all have to adjust.
I’ve been an estate agent since 1985 and would remind you that the market is cyclical. What we are seeing now, though, is not a 90s or noughties boom and bust but an adjustment that everyone knew had to come.
In the short term it may curb home buyers’ ambitions but in the long run the market will survive. We are still seeing people who want to buy and many who want to sell through desire to move somewhere new and not because of financial pressure.
That said, if your family budget is feeling extremely squeezed it may be time to move to somewhere that’s more suited to your current needs than your present home which maybe was exactly what suited when the kids were small – or not even a twinkle in your eye.
If you don’t need to be near junior schools because children have moved to college or into jobs (maybe even left altogether!) then there are families that will want your current home. So assess your present needs, your lifestyle, and even if moving would free up cash to indulge a hobby.
Buyers in the purchase process who have seen a mortgage offer expire because of transaction delays should speak to a broker to see what other choices are available. Talk to your estate agent as well because they are used to finding solutions to seemingly impossible problems affecting a transaction chain.
If you are one of those facing mortgage pain but who can’t move, contact your lender immediately. They would rather help you stay where you are if they can. Maybe a mortgage term can be extended or a repayment holiday taken (remember that this choice will still accrue an interest debt). The important thing is to seek advice. We will be happy to advise on property choices where we can and will point you towards expert advice.
Colin Shairp,
Director, Fine & Country Emsworth