The cost of living for many UK consumers has skyrocketed as a result of a further rise in inflation. Many homeowners are reportedly snapping up cheap rate home loans for fear of rate withdrawals in coming weeks.
A handful of lending institutions were still offering low rate loans at the back end of last week, however the majority of major lenders have already withdrawn such offers.
The Bank of England’s base rate is expected to climb to a record high of 5.75% over the next few months. Although many loan plans are directly tied into the rate of inflation, if has been suggested that panic buying may be uncalled for as the home loans industry is still exceptionally competitive, forcing many lenders to go against the grain when pricing their plans.
The biggest concern for economists is that rising rates will have an adverse effect on the housing market as a whole. And although the dramatic rate increase is said to be temporary, no one is expecting rates to fall, which is causing a slow down in the overall growth of the market.
There is some positive news for first time buyers however. The market slow down should enable many young buyers to get a foot on the ladder, however further studies suggest that much of the property available in inner city areas is being sold to landlords for buy-to-let purposes.
On the other side of the coin, the rental market is experiencing strong growth at the moment with many BTL landlords refusing to relinquish ownership of properties due to increasing demand. It is also suggested that BTL landlords could play a significant role in controlling the markets volatility.
If you are currently considering a home loan, plans linked to variable rates may be appealing at the moment, but it is always worth considering fixed rate deals from a security perspective.
