If the bank of England raise the interest rate do house prices usually come down?

Question

I'm hoping to buy a house this year and the Bank of England have just added another 0.25% to the ineterest rates. How does this effect house prices?

Answer 1

Generally, it depends on how much they go up by. I would guess that this latest 1/4% rise won't cause house prices to come down, but it may slow down house price inflation. What we in the City are all asking ourselves is, because this seems to be a pre-emptive move by the MPC, will they go up again in the next few months. This may cause people to think again over taking out a large mortgage and, if the rate does go up by another 1/4% within the next quarter, I think we could see prices begin to fall.

Answer 2

It will affect the rate of interest on the money people borrow. So credit card bills get more expensive and mortgage payments go up. it will only bring house prices down if people can no longer afford the mortgages to buy them. People will have to reduce prices in order to sell them. If this happens it is likely to be relatively short term as history shows that house prices will always go up considerably every 5-7 years.

Answer 3

When house prices fell last time there were a number of reasons for it. Now mortgage lenders keep devising and offering new ways for people to get on the property ladder e.g. 50 year mortgages or a group of friends buying, then there is still a market for houses, and the prices won't come down.

Answer 4

If interest rates go up, less people are likely to buy houses. Less people buying houses would tend to cause sellers to lower their asking price in hopes of selling their house. It's basic economics. Now, I wouldn't expect a .25% change in the interest rate to have any dramatic effect on things.

Answer 5

the price of the house will NOT DECREASE, from an economic point of view, the extra cost from the increase in interest will be passed down to the consumer. To answer ur question, no the house prices doesn come down, instead it s more likely than it will go up.

Answer 6

The rate going up might slow down the price increase,but i doubt it with the lack of housing in the market and the ease of mortgage borrowing.

Answer 7

no the rate of house price INCREASES slows down, that's all.

Don't try to predict what house prices will do. It's wasted effort and greater brains than ours have failed to predict house prices.

Just don't buy something you really can't afford, and you'll be all right.

Answer 8

It should at least slow down house price inflation.

However, there's not a simple relationship. If prices start to fall, we may see a crash (30-40% falls) - or it may just be a blip, and they'll start going up again.

Answer 9

I don't think it'll stop things too much. It may slow the amount of increase, but remember most of the rapid increases werehappening when rates were actually higher than they are now!

Answer 10

NOPE, they go up!...RPI (Retail Price Index) is linked with intrest rates, and if interest rates go up, RPI goes up, and RPI includes mortgages for houses etc...so sellers see this and increase price...THis is for the UK!