Breaking Property News – 22/06/2023
Daily bite-sized proptech and property news in partnership with Proptech-X.
The Bank of England moves the base rate by 50 points to 5%, highest rate for fifteen years, more rises likely.
Despite Rishi Sunak stating that he was ‘on it’, as he hid away inside an Ikea warehouse, there seems no end to the woe for mortgage borrowers in the UK, as variable rates, two year fixed rates and five year fixed rates look to rocket further.
Today most of the members of the Bank of England fiscal panel voted for a 0.5% hike in interest rates, with only two voting for no rise. This means that for some their monthly mortgage payments have increased by 50% in the the past 14-months.
If you add in the uptick in utility bills, cost of food and the economy rate of 8.4%, homeowners are going to really feel the squeeze. As are the 720,000 plus mortgage holders who will be looking to re-mortgage by the end of the year, and first time buyers eyeing rates of 6.3% or more.
With the housing market already slowing, this huge intervention by the Bank of England will be like a hammer blow to many agents, causing financial problems akin to 2008, and the depression triggered by the global bank failings.
Both the PM and the Chancellor of exchequer who are multi-millionaires look suddenly exposed and out of touch with the financial realities of the people they govern. Andrew Bailey Governor of the BoE may say that a short sharp interest rate trajectory will cure all, and Hunt may say we need to tough it out, but the reality is people will lose their homes and businesses will fail, as consumers have less cash to spend. The bigger problem is that all indicators pint to an autumn with a likely base rate of 5.75%, rising to 6% by Christmas, as inflation is out of control.
The rental sector will also be hit, as landlords re-financing or looking to finance new inventory will pass on the higher cost of property funding to the tenants.
Maybe if Mr Bailey was earning the minimum wage of £9.50 an hour, and not £600,000 a year, or PM Rishi Sunak (and his wife) did not have a £530M fortune, or if Jeremy Hunt the Chancellor did not have a £15M personal fortune, their world view of toughing it out, would be very different. When the PM understands doing nothing is going to see the decimation of the conservative party at the next general election, he will act. My thoughts that will happen too late, and we will be in a spiralling economic depression.
Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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