Fewer Brits now worried about the effect of interest rates

Fewer Brits now worried about the effect of interest rates

Since the end of last year, rumours have been becoming increasingly frequent that the Bank of England will take a big step later this year and increase the base rate from the historic low it has been sitting at for some time. 

This initially caused a mild panic in the property market, with many Brits predicting that such an increase would have a negative impact on their ability to get onto, or move up, the property ladder. 

However, another economic factor has now come into play that seems to have helped to allay these fears, and a drastic change in the rate of inflation now means that more and more Brits are feeling confident once again. 

According to the latest Halifax Housing Market Confidence Tracker, the fall of inflation to 0.5 per cent at the end of 2014 has gone hand in hand with a drop in the number of people who feel the interest rate change would have a negative impact on their ability to purchase a home. 

It said that the volume of potential buyers who were concerned about rising interest rates acting as a barrier to their ability to buy climbed from 14 per cent at the end of 2013 to 19 per cent by the end of 2014. However, the lower rate of inflation in December has changed this. 

In the final quarter of 2014, the number of people who were worried about interest rates blocking their purchase fell as low as 13 per cent, even lower than the total that was seen in 2013. 

Martin Ellis, housing economist at the Halifax, said: "Speculation over a potential rate rise was high on the news agenda at certain times in 2014 and the Housing Market Confidence Tracker showed consumers becoming increasingly anxious about interest rate rises.

"But with inflation falling sharply in the last few months it’s taken away some of risk of an imminent rise and worries have fallen accordingly. While a rate rise will happen eventually, lenders take this into account as part of our affordability checks in the mortgage application process. Going forward the key factor in how they adjust to any changes in rates will be the way in which borrowers manage their disposable income."