Similarly the Bank’s recent Monetary Policy Committee meeting minutes show a delicate consensus within the organisation to keep rates low for the immediate future.
We will be watching with interest to see how quickly debate increases within the committee over the timing and scale of a rise. It is absolutely right to exercise caution but in the meantime the current interest rate environment remains a significant factor in the gradual reshaping of housing tenure in the UK.
As IMLA’s recent report on housing tenure and the buy to let market makes clear, the status quo continues to play into landlords’ hands. A low base rate has provided some with a windfall as mortgages granted pre-financial crisis often had far lower costs than today. Landlords have also often benefited immensely from continuing lower rates and QE, furnishing many with both equity and cash.
Our report highlighted that by 2032 over half of UK homes will be rented should current trends prevail. The private rented sector is burgeoning, which will help to meet demand for housing given the lack of properties entering the purchase market, and is important for a society that requires more housing and good labour mobility.
Undeniably the number of new homes for sale is a key issue for aspiring buyers; the MPC’s minutes show a genuine concern over people delaying in putting their homes on the markets to cash in on price rises. Additionally it noted that mortgage approvals were 10,000 a month lower than their 71,000 Q1 prediction.
It is right that the Bank recognises that monetary policy isn’t the best way to tackle housing problems emanating from a lack of supply. It will nonetheless take a significant shift to arrest the continuing decline in UK home ownership.
Peter Williams is executive director of IMLA
