The interest rate rise from the Bank of England was a first for many homeowners who have never experienced one before. Naturally they will be concerned about what it means for them in terms of their home loan and ability to borrow in the future. But what will this rate rise actually mean in reality for these borrowers? More importantly what needs to be done to better stimulate the housing market?

So far, evidence suggests that the impact on the market will be limited. Those borrowers who have come to the end of fixed contracts may well find that rates are unchanged or even lower than they are currently paying. First time buyers continue to face challenges in making that first step on the ladder, however the proportion of this group taking out a mortgage is rising compared to other areas of the market. From the perspective of bridging lenders, they are unlikely to change their pricing structure, but will look carefully at how the market reacts over the long term, as they need to assess the viability of refinance exit routes.

Looking ahead to the Budget announcement later this month, potential solutions to the current housing crisis are expected to dominate. With the government under pressure to do more to stimulate the economy, consumers and the property industry alike are waiting to see whether the speculation will become reality. There have been rumours that Hammond could reduce the lower level rates of Stamp Duty Land Tax (SDLT) in England, in a further attempt to widen the party’s vote share and appeal to first time buyers. It will be interesting to see what the Welsh and Scottish legislators decide to do. Currently SDLT puts some people off moving to new jobs and keeps homebuyers living in houses that are far too large for their needs.

Another topic expected to dominate is borrowing to build, Sajid Javid, the Secretary of State for Communities and Local Government, recently indicated that the Government will announce a significant investment in housing. Javid said that the UK should “absolutely be considering it” by taking advantage of “record-low” interest rates for the purpose of increased borrowing.

Whether any of these measures will come to fruition remains to be seen but, with just weeks to go until the Budget, we will wait in anticipation.

Benson Hersch, CEO of the ASTL

A version of this article appeared in the November 2017 edition of Specialist Lending Solutions Alert