Andy Sommerville
, comments on today's decision from Bank of England to raise interest rates by 0.5%:
“Across the residential sector, interest rates rises are likely to increase workloads for property lawyers as transacting parties seek to push for quick resolutions out of fear that today’s increase won’t be the last, as the cost of borrowing continues to increase at pace. Many homebuyers stuck in the transaction logjam face a ticking clock to complete before their mortgage offer expires, as we wave goodbye to our historic era of low rates for good.
“This will increase an already monumental workload for conveyancers, putting pressure on our cumbersome property transaction process which reached a record 153 days in June, compared with 124 days pre-pandemic. Our transaction backlog is reflective of an archaic property purchasing system that is simply no longer fit for purpose, hastily exposed by the effects of lockdown. Rapidly increasing fall-throughs indicate a pressure-cooker moment for the market. Conveyancers need to lock in and understand short-term market pressures whilst adopting greater efficiencies through digitalisation to be able to cope with sustained market activity.
“Nationwide’s latest house price report shows the smallest level of growth in a year, with prices climbing by 0.1% in July – a sign that the property price boom is finally levelling out. But it’s hard to see rates rising to the point that they cancel out the strength of buyer demand, keeping house prices and transaction levels steady for now, and ensuring that lawyers caseloads are replenished as quickly as they can clear them.
“We are in a period of history defined by the greatest change in spatial needs for a generation. All of these characteristics create a property market that remains underpinned by demand and likely to remain highly active for the foreseeable future, outside of the usual seasonal, or portfolio management cycles.”
