Stabilised interest rates good news for the housing market

Effect of a Brexit on the housing market

Following the vote to leave the EU, there has been a pervasive air of “doom and gloom” in the news and talk about the housing market slowing down. There is no doubt that economic uncertainty caused by the “leave the UK” has to some extent fuelled investor doubts about investing in house building. It has also made individual buyers’ think carefully about whether to commit to large purchases such as a new home.

However, we’d argue that there’s been just a touch of fear-mongering going on here.

No need to panic…

Since the Brexit vote, the Bank of England has been actively working to calm market place fears, stabilize the UK economy and stimulate economic activity. As part of its measures, it has reduced the level of reserves that a bank has to hold (its capital requirements) – which in effect means that banks have more money to lend. In addition, the Bank’s Monetary Policy Committee voted yesterday (14 July 2016) to keep interest rates at 0.5% (rather than cutting them which most had anticipated).

This lack of a cut might be a disappointment for some house buyers especially those hoping for smaller mortgage rates. But buyers shouldn’t be put off: the Bank’s move to keep interest rates the same has been welcomed by the markets and, in any case, most agree that an interest rate reduction is likely in the short term.

Positive outlook for the housing market

We’re not the only ones with a positive outlook for the conveyancing market: our Property department has received a surge in new instructions for both commercial and residential transactions.

So- no doom and gloom in our office in the last few weeks. A stable interest rate and the hope of a cut soon is positive news for those of our clients purchasing property.

Contact

For further information, contact Michael Pitt on 0161 785 3500 or email michael.pitt@pearsonlegal.co.uk.

15 July 2016

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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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