Impact of Base Rate Increases on the UK Property Market

As a property expert, I believe that the consecutive increases in the base rate can be attributed to several factors, including the Bank of England's response to inflationary pressures and the use of quantitative easing. Quantitative easing has been a key tool used by the Bank of England to inject money into the economy and stimulate growth during periods of economic downturn. However, as the economy begins to recover and inflation rises, the Bank of England is forced to tighten monetary policy by raising interest rates.

The Impact on Borrowers

The repeated increases in the base rate have had a direct impact on the cost of borrowing for homeowners and investors. While those on fixed-rate mortgages may not be immediately affected, the continuous rise in interest rates could eventually lead to higher mortgage rates for new borrowers. Borrowers on tracker mortgages, including landlords in the buy-to-let market, are already facing higher outgoings due to the increased rates.

The Housing Market Pressure

As mentioned in the quotes above, the rise in interest rates puts pressure on the housing market, potentially leading to an imbalance in supply and demand as some investors may be forced to exit the market. This can result in higher rents for tenants and increased difficulty for first-time homebuyers. In response, some lenders have become more creative in offering mortgage products to help first-time buyers enter the market.

Conclusion

In conclusion, the continuous increase in the base rate can be partially attributed to the Bank of England's use of quantitative easing and the need to counter rising inflation. This has led to higher costs for borrowers, particularly those on tracker mortgages, and has put pressure on the housing market. It is crucial for the UK Government to take necessary steps to support homebuyers and landlords in managing these rising costs, especially as interest rates are expected to remain high in the near future.