Rightmove says yesterday’s Bank of England base rate rise to 3.5 per cent – the ninth hike in as many Bank meetings – will not fundamentally change the housing market.

Rightmove spokesperson Tim Bannister says: “It’s important to remember that this rise was largely expected by the markets and so will already have been factored into many mortgage lenders’ fixed rates. So the good news is we don’t expect this rise in the base rate to translate directly into increases in current fixed mortgage interest rates.  

“In late September we saw a rapid increase in mortgage interest rates beyond the base rate trajectory, so the indications are that the direction of travel of fixed-rate mortgage deals will be downward next year. The rise in the base rate will affect those on a tracker mortgage, though average tracker rates are currently lower than fixed-rate deals.

“We don’t expect this rise to have an impact on home-mover behaviour beyond what we’re already seeing. Many people will be using this time between Christmas and New Year to assess their options, consider what they can afford, and make a move next year, and they will be spurred on should fixed-rate mortgages drop as anticipated.”

Moneyfacts, the independent mortgage market monitor, takes a less optimistic line, with its finance expert – Rachel Springall – saying that the base rate rise was disappointing. 

She comments: “Consumers may breathe a sigh of relief to see fixed mortgage rates have started to drop in recent weeks and hope these rates will fall further. However, the cost to secure a new fixed deal is much higher than they may realise, as both the average two- and five-year fixed rates have increased by over 3.0 per cent during the past year. The erratic behaviour in mortgage pricing makes it essential for borrowers to seek advice to scrutinise all the options available to them.

“Whether now is the time to grab a new deal depends entirely on someone’s circumstances. As fixed rates are expected to come down further, borrowers may wish to wait and see what the next few weeks will bring. However, those who are sitting on a standard variable rate may wish to note the impact the base rate rises will have on their repayments. 

“Since December 2021, the average SVR has risen by 2.0 per cent and, as lenders are traditionally quick to pass on base rate rises, it will impact on someone’s monthly repayments. A rise of 0.5 per cent on the current average SVR of 6.40 per cent would add approximately £1,509 onto total repayments over two years.

“Moving into 2023, it will be interesting to see how demand for mortgages will be impacted as further base rate rises are expected and house prices are predicted to fall.”

Lawrence Bowles, director of research at Savills, adds: “We’re likely to see a slowdown in transaction activity from mortgaged buyers over the next few months, with cash buyers gaining a relative advantage. However, with the pace of interest rate hikes slowing and the possibility of rate cuts on the horizon, the picture looks like it will improve for mortgaged buyers in 2024 and beyond.”