Just under 1 in 5 believe that an interest rate increase to between 1% and 2% would be enough to have a detrimental effect on the housing market.
Also, according to more than three quarters of brokers, increasing the Bank of England base rate to 1% would not be a significant enough change to have a detrimental effect on SME builders’ and developers’ businesses.
Noel Meredith, Executive Director of United Trust Bank, said:
“What’s interesting about the results of this survey is that the vast majority of brokers working with developers think that the Bank of England will need to increase its base rate to what many experts believe will become the new ‘normal’ in order for it to have a negative impact on the property market. We have become used to having very low interest rates and although an increase from 0.5% to 3% sounds like a big leap, it’s very unlikely to happen quickly and clearly many brokers feel that there’s enough demand for the supply of new housing to keep buyers buying even if mortgages do become a little more expensive.
“Speculation about increasing interest rates has come and gone periodically for around the last 18 months. It’s no surprise therefore that the majority of developers active today have structured their finances in such a way as to be prepared for when higher interest rates inevitably come. Whilst the first increase in the base rate in what will be more than 80 months will send a slight tremor across the industry, it certainly won’t come as a surprise and I am sure it’s not going to cause many developers or their brokers to lose much sleep.”
