How will the recent economic growth effect the plans of would-be home buyers?

As we start to see sustained growth in the economy, many buyers, particularly those who are thinking of entering the market for the first time or those considering a significant hike in their borrowing level, will now start to experience a fresh range of anxieties. The most likely and obvious one being whether or not mortgage interest rates are likely to rise to an uncomfortable level?

As an Estate Agent based in the Bath, Wells, Chilcompton area, where recent rises in average selling prices have been significant it is important that we seek to understand as much about the market as we can. Here we endeavour to disseminate the recent headlines about the immediate future of interest rates, and by our reckoning the indications are all pretty good!

Mark Carney, Governor of the Bank of England has previously set out his interest rate agenda by pegging rises to what is called a “Forward Guidance Strategy”. Within these guidelines Carney has suggested that interest rates will remain at their present low until, amongst other things, unemployment falls to 7% – originally predicted to be 2016. Whilst it has already dropped to 7.6% (reported as of todays date,14th Nov 2013), Carney appears unmoved and has been keen to indicate that the stability he has been keen to protect will remain his focus. More on Forward Guidance at http://www.bbc.co.uk/news/business-23145755

In a Guardian article on 5th September, Martin Beck, UK economist at the consultancy Capital Economics, also suggested that the current economic growth that we are enjoying is not going to suddenly result in a sustained drop in unemployment,. Beck considers the evidence that much of the increased demand is being met more through higher productivity than rises in employment. This would therefore suggest that the 7% target figure is still some way off. The article can be read in full at: http://www.theguardian.com/business/2013/sep/05/interest-rates-economic-growth-mark-carney

Whilst far from exhaustive, when combined with much of the available commentary on the economy it would appear that stability remains a key part of the Bank of England agenda.

Certainly, we hope that customers looking to buy a home in the BA2, BA3 and BA5 area remain confident in the future and as an Estate Agent active in Chilcompton, Midsomer Norton, Wells, Holcombe, BA2, BA3 and BA5 we would love to help you.

NB: These are our views and interpretations only, they do not constitute advice, we are not economists or financial advisors so whilst we hope to provide meaningful information we would certainly recommend that you seek professional expertise to help with planning you finances.