The Bank of England has made the decision to leave interest rates frozen at 0.75%, a decision welcomed by many.
“No news is certainly good news in this respect and the right choice considering the current economic landscape. Inflation remains at a moderate level and to increase money costs for both UK business and the nation’s consumers, just weeks away from a potentially hard Brexit, would be foolish to say the least.” Andy Soloman, Yomdel CEO.
Although emergency contingency plans are being made for a messy EU exit, this decision should, at least, act as a steady hand for both UK businesses and their consumers.
While the downside may be a depreciation of the pound, its movement of late has been erratic to say the least and will continue to jump up and down depending on how Brexit proceedings materialise and regardless of interest rate levels.
A freeze in rates will be welcomed by the UK retail sector after many struggled despite the traditional spike in spending over the Christmas period.
“We’ve already seen shop prices rise this year as the retail sector continues to struggle amidst an air of wavering consumer sentiment and so this freeze in rates should hopefully help bolster consumer spending.” Andy Soloman, Yomdel CEO.
But what about the UK property market?
“This diminished level of consumer activity is also hitting a lethargic property market that has yet to get out of second gear following the festive lull, with the rate of price growth slowing as a result.” Andy Soloman, Yomdel CEO.
However, those attempting to save for that initial financial barrier of a mortgage deposit might not welcome the freeze as warmly, but with rates having remained at record lows for almost a decade it makes little difference to the wider picture.
The news will of course encourage those already in a position to buy as the cost of borrowing via a mortgage remains at low levels. This week, the latest Halifax House Price Index showed house prices, although still marginally higher on an annual basis, had dropped -2.9% in January alone.
There is a clear seasonality in play during January as the market goes back to business after the festive break, however, price growth has been reportedly slowing for some time now.
For those that are looking to buy, a reduction in price growth coupled with the freeze in interest rates is an attractive combination. We’ve already seen a strong uplift in mortgage approvals and Wednesday’s rates announcement should help to bolster these returning levels of buyer demand.
In the long-term, this growing sentiment should translate to actual sales and help to re-stimulate the market.
“Hopefully, a freeze in rates will encourage a degree of consumer confidence to return as the cost of borrowing remains at a very palatable rate, although realistically, this is unlikely to materialise until late March at the earliest.” Andy Soloman, Yomdel CEO.
Now more than ever it is vital that every lead is answered in a timely fashion to ensure your agency has the available stock to satisfy this returning buyer demand. If you’re not working around the clock, seven days a week to do so, you aren’t competitive in today’s digital landscape and it’s important to consider how you can pick up the slack outside of office hours. Online, contact forms are a good starting point to at least capture leads, but live managed chat or phone providers enable them to be answered immediately while creating a feeling that your company is responsive, professional and always on hand – something that speaks volumes to sellers.
It’s also important to consider your proposition and whether it is competitive enough in the current climate. Pay on completion models certainly have the edge in an uncertain market, but sellers are also conscious about the price they might pay given the reduction in their property’s value. A sale at 1.7% is better than no sale at 2% and also demonstrates you are willing to work for your client, creating an immediate positive relationship.