{"id":2971,"date":"2017-11-01T17:51:27","date_gmt":"2017-11-01T17:51:27","guid":{"rendered":"http:\/\/poseidon-gp.com\/property\/?p=2971"},"modified":"2017-11-01T17:51:27","modified_gmt":"2017-11-01T17:51:27","slug":"uk-interest-rate-rise-would-not-hit-house-prices","status":"publish","type":"post","link":"https:\/\/poseidon-gp.com\/property\/uk-interest-rate-rise-would-not-hit-house-prices\/","title":{"rendered":"UK interest rate rise would not hit house prices"},"content":{"rendered":"<p><em>Ratings agency says property market is resilient despite Brexit uncertainty \u2013 but outlook for buy-to-let has got worse<\/em><\/p>\n<p>The UK\u2019s\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/housingmarket\">property market\u00a0<\/a>will take this week\u2019s expected rise in interest rates in its stride, according to ratings agency Moody\u2019s, but it warned that the outlook for the buy-to-let market has worsened significantly.<\/p>\n<p>The agency, which along with Standard &amp; Poor\u2019s was\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/2017\/jan\/14\/moodys-864m-penalty-for-ratings-in-run-up-to-2008-financial-crisis\">widely condemned<\/a>\u00a0for awarding triple-A ratings to sub-prime mortgage books before the 2008 financial crisis, said the British property market is more resilient than is widely believed.<\/p>\n<p>Moody\u2019s economist Colin Ellis said: \u201cWe haven\u2019t seen quite the negative impact from the\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/politics\/eu-referendum\">Brexit<\/a>\u00a0referendum that some had forecast, but then we weren\u2019t as bearish as the OECD [Organisation for Economic Cooperation and Development] or the NIESR [National Institute of Economic and Social Research].<\/p>\n<aside class=\"element element-rich-link element--thumbnail element-rich-link--upgraded\">\n<div class=\"rich-link tone-news--item \"><\/div>\n<\/aside>\n<p>\u201cThe [property] market is holding up OK. There is an underlying resilience in prices even if transaction activity has been affected. If you look at the balance between the cost of renting or buying, then UK house prices are not overexposed.<\/p>\n<p>\u201cShocks are being dealt with, and even in the event of a Brexit no-deal, then it\u2019s not looking like the UK economy falling off a sharp cliff.\u201d<\/p>\n<p>On Thursday the Bank of England is expected to<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/money\/2017\/oct\/28\/interest-rate-rise-affect-homeowners-savers-bank-of-england\">\u00a0raise interest rates for the first time in 10 years from 0.25% to 0.5%<\/a>. But Moody\u2019s said it was relaxed about the impact on households and their ability to continue paying mortgages.<\/p>\n<p>\u201cWe have expected a rate rise for some time. This is about taking away emergency stimulus introduced after the referendum vote. A rise of 25 basis points [0.25%] is not going to move the dial. A rise of 0.25% pales into insignificance compared to the 8%-10% decline in the currency.\u201d<\/p>\n<p>Estate agents, faced with the first rate hike for a decade, have been keenly talking up the housing market.<\/p>\n<p>Russell Quirk of eMoov said: \u201cAny increase in monthly payments, like interest rates themselves, will be marginal and manageable for those impacted. On the typical \u00a3150,000 loan, homeowners will be out of pocket around \u00a315 to \u00a330 a month, certainly no grounds to shout \u2018financial meltdown\u2019.<\/p>\n<p>\u201cHouse price growth and the market\u2019s overall stability have been incredibly resilient despite the EU vote and a snap general election. A few quid added to the average mortgage repayment will not deter this growth in the medium to long term.\u201d<\/p>\n<aside class=\"element element-rich-link element--thumbnail element-rich-link--upgraded\">\n<div class=\"rich-link tone-news--item \">\n<div class=\"rich-link__container\">\n<div class=\"rich-link__image-container u-responsive-ratio\"><img decoding=\"async\" src=\"https:\/\/i.guim.co.uk\/img\/media\/b778655f9b17374a85b02c69b4fb453511c8be4e\/0_78_3500_2100\/master\/3500.jpg?w=460&amp;q=55&amp;auto=format&amp;usm=12&amp;fit=max&amp;s=d49737f52c8ffff012c38051436b3ea8\" \/><\/div>\n<div class=\"rich-link__header\"><\/div>\n<div class=\"rich-link__read-more\">\n<div class=\"rich-link__arrow\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/aside>\n<p>However, Moody\u2019s warned that<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/money\/buying-to-let\">\u00a0buy to let<\/a>\u00a0is the weak link in the property market. It said it expected a rise in arrears and defaults within packages of buy-to-let mortgage loans, particularly on borrowing in recent years.<\/p>\n<p>It warned landlords to expect falling rental income, particularly in London and the south-east, while\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/money\/2017\/apr\/01\/mortgage-tax-relief-cut-doesnt-add-up-buy-to-let-landlords\">rising taxes<\/a>\u00a0will also make it more difficult for landlords to cover their mortgage payments.<\/p>\n<p>\u201cLandlords will have much less wiggle room,\u201d said Moody\u2019s analyst Annabel Schaafsma. \u201cArrears will go up, although the increases will not be astronomical and they are increasing from a low base.\u201d<\/p>\n<p>Most books of UK mortgages which have been packaged up as instruments to be traded on markets remain triple-A-rated, said Moody\u2019s. But the agency insisted that it has tightened up standards since the financial crash exposed some triple-A mortgage books as sub-prime junk loans.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Ratings agency says property market is resilient despite Brexit uncertainty \u2013 but outlook for buy-to-let has got worse The UK\u2019s\u00a0property market\u00a0will take this week\u2019s expected rise in interest rates in its stride, according to ratings agency Moody\u2019s, but it warned that the outlook for the buy-to-let market has worsened significantly. The agency, which along with [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[7],"tags":[],"class_list":["post-2971","post","type-post","status-publish","format-standard","hentry","category-projects-uk"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9PjAq-LV","_links":{"self":[{"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/posts\/2971","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/comments?post=2971"}],"version-history":[{"count":0,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/posts\/2971\/revisions"}],"wp:attachment":[{"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/media?parent=2971"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/categories?post=2971"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/tags?post=2971"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}