Rate rise could dampen housing market

SmartNewHomes.com has warned that a rate rise in November would dampen the market.

David Bexon, managing director of SmartNewHomes.com, says: “A rate rise in November would seriously dampen the market at this crucial time when it is slowly starting to show signs of growth.

“With predicted higher costs of transactions next year from Home Information Packs, albeit slimmed down, a rate rise at this time could send house prices into reverse and seriously damage buyer confidence.

“Recent growth has been restricted to London and the South East – it is not a national phenomenon.

“Affordability is a cause for serious concern and increasing mortgage rates will only exacerbate this situation.

“The existing supply and demand imbalance in the market has been caused by an over bureaucratic planning system – where the average time taken to gain approval has increased by 50% since Labour came to power (and promised to reform the system) and this cannot be ignored.

“The planning process must be improved and the mix of new housing carefully monitored to ensure the development of adequate and affordable housing across the UK.

“I would strongly urge the Bank of England to think very carefully about the implications before introducing a rate rise this month.”