There’s certainly never a dull moment in the housing market and in recent years we’ve had many changes linked both directly to the property sector and to the economy more widely.  One thing that hasn’t changed all that much, however, is the Bank of England’s base rate which directly impacts mortgage interest rates.

That was until last November when the first increase in a decade was announced taking the base rate to 0.5%.  Since then, the Bank of England hasn’t made further increases although at least one, if not two, further increases are hotly anticipated to be announced by the Monetary Policy Committee this year – possibly as soon as their next announcement on May 10th.

So, what would a rise, probably of a further quarter per cent, mean for homeowners with loan liabilities?

Reassuringly, it doesn’t need to mean doom and gloom!

Indeed, an increasing interest rate demonstrates both the recovery of the housing market and the economy and with the start of the financial downturn now ten years ago, it’s about time the market regained its mojo!

Seeing the base rate start to climb may ring panic bells but it really needn’t.  An increase up to 0.75% is, in all reality, a small increase and going up gradually and in a consistent manner, simple indicates that any shakiness or instability in the market is disappearing – that can’t be a bad thing!   But what is the reality here in North West London? 

Well, of the 391,000 households across the region, 49.5% are occupied by the owners and 95,200 don’t require a mortgage.  For those who do have a mortgage, the total outstanding balance (as of June last year) stands at £277.2bn, equating to around £281,000 per household – below the regional average of £301,500 but above the national average of £117,000. 

So yes, those people could be affected by a rate increase, but it’ll depend on the type of mortgage they hold.

Those on a standard variable rate (SVR) or tracker mortgage will notice a change in interest rates first, while those on a fixed rate won’t notice any immediate change.  The average house price in North West London is £702,300, so those on a 60% mortgage could expect to pay just over £700 more annually on their mortgage if our predicted rate comes into effect.  But, given that SVR and tracker mortgages have enjoyed historically low interest rates in recent years, many sensible borrowers will be prepared for slightly bigger monthly payments.

However, it’s not simply a case of rates going up.  The number of first time buyers entering the market is at its highest since the financial crisis.  However, at the same time, overall transactions are still down 35.4% in and around North West London compared to the pre-2008 average.

What this combination means is that banks are still keen to capture ‘clients for life’ in first time buyers, whilst securing as many clients as possible from an increasingly limited pool.  They do this, of course, by offering attractive rates to secure business!

So, if on May 10th the base rate does increase, don’t go in to meltdown.  If you’re concerned by your mortgage options, then visit one of our Andrews branches across North West London or visit us online at and speak to one of our experts who can guide you through the options open to you.