What does the Bank of England rate rise mean for house prices? | The Sun

THE Bank of England (BoE) hiked its base rate to .3.5% today – the highest level in 14 years.

It increased its rate from 3% to 3.5% – and is the ninth time in a row that BoE has raised rates to tackle soaring prices.

It follows the biggest single hike from 2.25% to 3% in November.

While that's good news for savers who might get a good deal on their nest egg, it typically means millions of mortgage owners will see their monthly repayments pushed up.

Not only that, but loans and credit cards will most likely be more expensive too.

Often, high street banks will up their interest rates when the BoE hikes the base rate.

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The BoE said inflation is expected to continue to fall gradually over the first few months of 2023.

It has reduced its inflation forecasts by 0.75 percentage points on the back of government energy support.

But what does it mean for house prices?

House prices fell by 2.3% in November, the biggest monthly drop in over a decade.

Halifax bank's index showed annual house price growth slowed to 4.7 per cent, from 8.2 per cent in October.

It means the average UK house price was £285,579, down from £292,406 last month, a drop of more than £6,000.

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Rising mortgage interest rates have seen potential home movers hold off and wait to see what happens before buying up.

Managing Director of Barrows and Forrester, James Forrester, commented: “While a Christmas interest rate increase is as desirable as a pair of socks from your aunty, the silver lining to today’s latest hike is that this should hopefully be the peak, with less chance of a further increase on the cards for 2023.

Should this be the case, the New Year should bring a far more settled outlook for the UK property market, as we adjust to a new normal following a turbulent few months.”

Chris Hodgkinson, managing director at House Buyer Bureau, Chris Hodgkinson, said; "Unfortunately, the short term consequence of this decision will be thousands stretched even thinner due to the increased cost of their mortgage, with many more homebuyers choosing to sit tight and put off their purchase until 2023, at the very least.

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"This will mean more sales falling through and a further reduction in market activity, which is sure to bring a further decline in house prices.

"As a result, we can expect the downward trends that have already emerged in recent months to continue well into the new year.”

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