‘Investors should be encouraged by latest announcements’

Investors and landlords should be encouraged by the latest base rate hold at 3.75% and the recent inflation announcement of 2.8%, according to property experts.

Kevin Shaw, national sales managing director at LRG, said the picture looked materially better than just a few weeks ago. “If the ceasefire in the Middle East holds and oil prices continue to ease, that should feed gradually into confidence, costs and consumer behaviour,” he said.

More than just house prices

“In the housing market, the sentiment is important because buyers do not look at house prices alone – they look at mortgage affordability, energy costs, the many other costs that come with buying a new property, and of course the future direction of the market. And the mortgage market has already started to respond. Swap rates have moved down and we are edging closer to seeing more mortgage products beginning with a three.”

He said LRG had already seen signs of a market that is looking up. “Across our brands, new sales agreed are up 16% year-on-year for the first two weeks of June and offers are up 5%. That tells us that sellers are becoming more realistic and the number of serious buyers is increasing.”

Shaw said this was also encouraging for first-time buyers. “Mortgage rates have not risen as many feared and lenders are showing more flexibility on deposits and income multiples. For sellers, the good news is that activity is returning, but pricing still has to meet the market.”

And he said that returning confidence would help to get the market moving further. “Sentiment is not a fluffy concept in property. An increase in sold signs, whether on the street or online, is perhaps the most powerful factor in encouraging both sellers and buyers to commit to a move. This is exactly what the market needs as it enters the summer months.”

Sarah Thompson, group financial services director, Mortgage Scout, agreed: “For those in the property market more broadly, a rate hold is reassuring. No increases means greater confidence for buyers and sellers, and more opportunity to move forward with decisions that may have been on hold.”

Encouraging news for landlords

Meanwhile, Steve Cox, chief commercial officer at buy-to-let lender Fleet Mortgages, said the news should also be welcomed by buy-to-let investors. “For the buy-to-let market, the encouraging news is that mortgage pricing tends to be detached from short-term expectations around Bank Base Rate anyway.

“In recent weeks, calmer financial markets and growing confidence that tensions in the Middle East may not escalate further have helped improve funding conditions, allowing lenders across the market, including Fleet, to reduce rates. While swap rates will continue to respond to economic data and global events, advisers and landlord clients can take confidence from the fact product pricing has been moving in the right direction despite ongoing uncertainty around monetary policy.”