The steady decline in inflation has eased concerns of potential homebuyers about interest rates, Halifax says.
The proportion of people saying that rates are stopping them from making a property purchase is now the lowest in over a year, the Halifax Housing Market Confidence Tracker shows.
Consumers’ concerns over interest rates were growing for the most part of 2014, rising from 15 per cent in the first quarter to 18 per cent in the second and 19 per cent in the third. However, in the last three months to the year’s end confidence went up as inflation rates dropped and the proportion of concerned fell to 13 per cent.
The inflation rate in December plummeted to 0.5 per cent, its lowest level since May 2000.
Martin Ellis, housing economist at Halifax, comments:
“Speculation over a potential rate rise was high on the news agenda at certain times in 2014 and the Housing Market Confidence Tracker showed consumers becoming increasingly anxious about interest rate rises. But with inflation falling sharply in the last few months it’s taken away some of risk of an imminent rise and worries have fallen accordingly.
“While a rate rise will happen eventually, lenders take this into account as part of our affordability checks in the mortgage application process. Going forward the key factor in how they adjust to any changes in rates will be the way in which borrowers manage their disposable income.”
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