'We need interest rates to peak'

Haslams Estate Agents is hopeful interest rates are reaching a peak so they can begin to reduce.

Last week’s half per cent interest rate rise to five per cent has led to predictions of a housing market collapse.

But Mike Shearn, chief operating office at Thames Tap partner Haslams, told us the move makes for sensationalist headlines and led to buyers and sellers delaying their transactions, although enquiries are still coming in.

Mr Shearn said: “As per usual the media love a story about potential house price crashes as it plays on people’s fears and so it sells newspapers.

“Unfortunately, such headlines can undermine public confidence: the consequences of which can have a huge impact on society given the importance housing has both socially and economically.

“The reality is that we’re still receiving a good number of enquiries from buyers and sellers across both new homes and second-hand markets although it is fair to say that some segments are faring much better than others.

“The business challenge across all markets is converting this interest into transactions and this is being somewhat undermined by the constant upwards stair-casing of interest rates.

“It means that there is little urgency to transact other than by those that have to – ie those forced to transact due to divorce, death, or debt. Many, but certainly not all, are taking their time, sitting on their hands, or just watching to see how things play out.

“What we need is for interest rates to reach their peak as quickly as reasonably possible and to then plateau for a period of time before coming back down.

“This will bring confidence back into the market. Poor forecasting has been central to the profile of interest hikes over the past 12 months but, in hindsight, it would certainly have been better to have had larger and more painful increments in base rates.

“Yes these may have led to a sharper shock but that would have impacted quicker and consequently the pain would have been shorter.

“I hope that we are now almost at the peak rate meaning that the dust can settle, inflation gets under control, and then rates can start coming down.”

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