Property buyers are being spurred into action by the prospect of mortgage rates rising further in the near future, 18% more property sales were agreed in February compared to January of this year.
A number of mortgage lenders have recently increased rates for their five-year fixed-term mortgages and the average is now 5.47%. This is a 0.07% increase since the beginning of March and a significant difference from the 3.94% average that buyers enjoyed in December 2023. The latest Monetary Policy Report from the Bank of England suggests that interest rates are unlikely to be cut until at least the second half of the year.
Chestertons Head of Sales, Matt Thompson, says: “Many people believe that mortgage rates may be increasing further over the coming months and feel they need to act now while rates are more affordable. Despite some buyers having waited for the Spring Budget before making an offer, in the hope of a change to Stamp Duty, London’s property market remained extremely busy throughout February.”
Although we’ve seen a 6.5% uplift in the number of properties coming onto the market, demand still outweighs supply which is expected to fuel further price growth. This is confirmed by Rightmove’s latest House Price Indexes which revealed that property prices in the capital increased by 2.8% in February vs January and 0.6% in March vs February.
“The steady growth that property values have seen since the beginning of the year is yet another trigger for house hunters wanting to finalise their search sooner rather than later”, Thompson adds.