Buying frenzy ahead of another rise in interest rate

THE biggest hike in interest rates for more than 30 years is expected later this month.

There has also been a surge in buying activity reported by some estate agents in August, while renters are turning to smaller properties to cope with the cost-of-living crisis.

Interest rates rise

The Bank of England revealed the new base interest rate on September 22, with a rise from the previous 1.75 per cent rate to 2.25 per cent.

The move is an attempt to slow the rate of rising prices, but interest rates have not been this high since the 2008 financial crisis.

This increase will undoubtedly bring some worry for many borrowers.

The rates are likely to rise again in November and December, with many economists expecting the rate to be as high as 4.5 per cent by next summer.

The hike in rates is designed to keep inflation under control, as it’s currently running at 9.9 per cent – almost five times higher than the Bank of England’s target of two per cent.

Stamp Duty falls

In a bid to help buyers, the Government has announced a cut in Stamp Duty – the tax that must be paid when buying a property in England and Northern Ireland.

The threshold has been raised to £250,000 from £125,000, and for first-time buyers it has increased from £300,000 to £425,000.

The new Chancellor Kwasi Kwarteng also increased the value of the property on which first-time buyers can claim Stamp Duty relief. This increases from £500,000 to £625,000.

Energy bills frozen for two years

In good news for homeowners and tenants, new Prime Minister Liz Truss has revealed the Government’s energy plan to help tackle the rising cost of living crisis.

The Energy Price Guarantee will mean that the average energy bill will be frozen at £2,500 for the next two years, starting from October, far below the previously proposed £3,549 price cap set by Ofgem.

This is in addition to the one-off payment of £400 that all households will be entitled to.

The new scheme is expected to cost the Government around £150bn – a cost which is likely to be passed on to taxpayers in years to come.

Estate agents report ‘buying frenzy’

Downer & Co had their busiest August ever, with other agents reporting a flurry of activity on properties in recent weeks, as many buyers look to secure a mortgage deal before interest rates increase again later this year.

Whilst the recent surge has temporarily halted the expected slowdown in the property market, demand is expected to slow as the UK heads towards a likely recession.

Renters look for smaller homes

Data released by property website Zoopla has revealed a sharp increase in the number of renters looking for smaller properties.

Its figures have revealed a significant shift in searches from three-bed houses to two-bed flats, as renters look to reduce their outgoings.

Average rents have increased by £115 per month over the past year, with the rise outpacing earnings growth nationwide.

And with the difference in rents on a two-bed flat and a three-bed house being £105 per month outside London, it’s clear to see why renters are looking for smaller properties.

For a more detailed overview of the Newbury area, please get in touch with Downer & Co .

We are your local property experts and with over 30 years in the business we have seen it all before!

Call us on (01635) 523777 or email leefenntripp@downer.co.uk