Money Matters: Craig Poulter on how a potential drop in house prices might affect interest rates

London has seen its slowest period of growth for five years which for many is an indicator of what’s to come for many other parts of the UK. Whether that happens is yet to be seen but commonly predicted.

Hypothetically, what is the likely knock on effect to the mortgage market?

It’s no secret that Mark Carney (Head of the Bank of England) has stated he expects interest rates to rise in the not too distant future but will it be an interest rate rise that tips the balance on house prices? I guess only time will tell but we should still be doing all we can to safeguard ourselves against the threat of increasing interest rates.

Also, there is the potential of a dip in house prices being the final nail in the coffin for our record low interest rates. If this resulted in a stagnant housing market how would the treasury deal with a significant reduction in the vast income they receive from the Stamp Duty associated with people moving to a new house or buying an investment property? Is our current deficit not already in the billions annually? Could this save the low interest rates for a little longer?

We should be doing all we can to safeguard ourselves

Whatever happens we can still be the masters of our own financial destiny and take advantage of the uncertainty that exists. Mortgage lenders are still very keen to offer loans with exceptional interest rates. I think it’s fair to assume that many are now turning to the longer term fixed rates available in the market with five year deals being extremely competitive. If you think five years still doesn’t offer you enough security, seven and 10 year deals can also be found with competitive rates.

If you’re concerned by the potential rise in interest rates or your current mortgage deal is coming to an end shortly feel free to get in touch for a no obligation review.

Craig Poulter Certs CII (MP &ER)
www.venturemm.co.uk
01323 894532