Interest up – classic sales stable
Analysts say raised interest rates shouldn’t affect the UK’s classic market
The Bank of England has raised interest rates for the first time in ten years – but industry experts predict that the classic car industry will remain mostly unchanged.
The rise from 0.25 per cent to 0.5 per cent, a result of the bank’s attempt to slow inflation, came into effect on 2 November.
Auction analyst Richard Hudson Evans, thinks that the auction scene will remain mostly unaffected, but there might be some more movement as people look to liquefy assets. He says: ‘I certainly don’t think it will have any immediate effect. If anything, I think there will be a few people who are worried about increasing mortgages and credit card bills. These people will attempt to offload classics and cash them in. I predict that some more cars will come to auction, but there won’t be an avalanche.’
Simon Lambert, editor of specialist financial website, thisismoney.co.uk, sees a potential cooling of the classic market. He says: ‘For many, the Bank of England’s decision to raise the base rate will feel a long way away from the classic car world, but the two are connected.
‘Classic car values have rocketed through the low interest rate era, as those with savings decide either to enjoy their money by spending it on a dream car, or that a good appreciating classic is a better prospect than earning next to nothing in interest on cash in the bank.
‘A slight shift up to 0.5 per cent for the base rate won’t change things much, but if we are at the start of a cycle where rates rise quicker than previously expected, it could take some of the heat out of the classic car market.’
Historics at Brooklands’ auction director, Edward Bridger-Stille, remains upbeat and says: ‘I anticipate that classic car values will remain largely unaffected by the very modest interest rate increase.
‘A few pounds more on loans will not dent prices. Confidence, however, is a different thing altogether and rather harder to predict.’