House buyers not helped by interest rate rise
Published On 9 October 2006
The decision by the Bank of England's monetary policy committee to raise interest rates to 4.75 per cent this August has not assisted homebuyers, according to one UK banking group.Yorkshire Bank published its latest report on homebuyers' figures this weekend and found that just nine per cent of property buyers would choose to delay their purchase because of higher borrowing rates.
Gary Lumby explained that this decision goes against traditional property purchasing logic which states buyers are put off by higher interest rates.
He said: "Normally you would expect that with higher interest rates, buyers' budgets would be tighter. This in turn might result in more buyers thinking to offer under the asking price.
"However, sellers are realising that with house prices continuing to grow, they are in the driving seat and can hold out for the asking price at least. As a result buyers are having to refine their tactics accordingly."
The study also suggested that buyers are not being put off property purchases as many are anticipating a further interest rate rise by the Bank of England before the year is out.
A number of analysts are predicting a further quarter point rise in the base rate by the monetary policy committee in November taking interest rates up to five per cent.
