Mike Culhane is the chief executive of The Oakwood Group
On the face of it, recent headlines have not been good news for the mortgage market. The announcement of a base rate rise on one day and barely 24 hours later indicators showing rising repossessions are not the stuff of mortgage industry dreams. But while market activity may moderate in the coming months, the fundamentals are still in good shape and these headlines should not be allowed to dent the confidence that has been built since the start of this record-breaking year. The recent interest rate change came as a bit of a surprise (as did the one last August), but we had been expecting one at some time this year. The question now is whether this is a one-off adjustment designed as a pre-emptive strike to keep inflation under control in an economy that is growing faster than predicted with little spare capacity, or whether it is part of a general tightening of monetary policy that will see further rises. If it is merely a pre-emptive strike we need not be overly concerned. As the Council of Mortgage Lenders points out, a number of factors will limit its impact including the increased uptake of fixed rate deals of late. But if it is followed by further rises confidence could be badly hit. Although we will know more when the Bank of England’s Inflation Report comes out this week I believe this is a one-off rise. It should be remembered that only a month ago the Monetary Policy Committee voted unanimously to keep rates on hold. There has been little evidence of increased inflation beyond rising energy prices, which combined with a strong pound should produce deflationary pressure. Meanwhile, the news of a rise in the number of repossessions was not nearly as bad as some headlines made out. While it is true that repossessions are at their highest for five years, they are still at a low level by historical standards. There was also positive news on this front with the number of mortgages in short-term arrears falling. This is an indication that repossessions are not out of control or even on an excessively upward trend. They are returning to normal levels after years of lows. The fundamentals of the market are strong. Affordability is at a reasonable level, house prices have stabilised and the economy is performing solidly. While the rise in interest rates should make us cautious until we have more news on the inflation outlook and MPC thinking, it should not worry us unduly. In the meantime, the lending records tumble. Some of this momentum may now be lost with lending levels coming down from their recent spectacular highs but this has been expected for some time. With the market showing fierce competition and innovation, we should be confident about the future.