The recent Bank of England rate rise has discouraged prospective buyers from moving home, according to data released by AA Financial Services.
A study published today (13 August) found the proportion of British adults planning to move home in the next six months, a figure that had remained consistent at 8 per cent throughout 2018, dropped to 6 per cent in the two days following the base rate rise.
At the beginning of August, the monetary policy committee unanimously voted to raise the base rate of interest by 0.25 per cent to 0.75 per cent - followed by banks and building societies applying the full change to their mortgage products.
AA analysed data collected in July, before the rise, which showed 22 per cent of adults were considering moving house in the next two years, with those planning a move in the next three months having risen to 5 per cent. But this figure dropped to 4 per cent after the rate rise.
David Searle, managing director at AA Financial Services, said the July data had painted a positive picture for August and September, but evidence showed the rate rise had an immediate impact on people’s thinking and plans.
He said given many people are moving home to save money, release equity or to make their money go a bit further, it seemed that for some the reality of living with rate rises tempered plans to move in the short term.
Mr Searle said it was too early to tell if the immediate impact was a short-term reaction but he expects to see more people putting their plans on hold.
He said: "We saw many positive signs emerging from our research in July and a promise of a house-moving high for late summer, which the rate rise seems to have dampened.
"The key issue for many now is not so much house price trends but the cost of borrowing. It is now a time for those moving home to shop around for a mortgage deal that works for them and is sustainable in the longer term."
David Hollingworth, associate director of communications at London & Country Mortgages, said it was difficult at this stage to assess any longer term impact that the base rate rise may have on homemovers’ plans.
He said: "In the immediate aftermath of the rise it could lead to a slight uptick in uncertainty over whether to make a move in the near term but we have to remember that base rate remains at extremely low levels and the bank continues to underline that any future increases are expected to be at a gradual pace and to a limited extent.
"Consequently mortgage rates are very competitive and in many cases offer borrowers the chance to protect against future rate rises through fixed rates lasting from two years through to ten - we may therefore see any immediate reaction to the rate rise smooth out over time as homebuyers readjust."