Bank of England may raise interests rates on 21st of September
Everyone knows that the Bank of England base rate is 5.25%, the highest level since the global banking crisis of 2008, in less than a month we will learn if the new rate will be 5.5% or more, or left at the same level or even decreased. It will be critical to the impetus or otherwise of the September housing market, which traditionally sees a six week rally prior to hitting the end of year cycle.
Is there going to be a housing recession, and will interest rates continue to climb, well Steve Eisman may have a scenario that will play out in the UK. Eisman’s story was fictionalised in the film ‘The Big Short’ (he was re-named as Mark Baum) a distillation of the reasons behind the 2008 banking crash and the fallout of the property market.
Eisman has just gone on record about his thoughts on the American residential market, where lending rates are at a 21 year high, he said, “Housing hasn’t collapsed in the United States, but it’s kind of locked and housing prices have gone down. So A), it’s hard to sell and B), you’re selling for less. Now, as long as people are employed, they’re not going to sell their home down 40%. They’ll just live in their home.”
Eisman then is talking about a traditional recession playing out in America, the UK housing market though is unique in many ways. Not least the continued imprudent intervention of the government, with Chancellors of the Exchequer like Rishi Sunak and his ill advised SDLT giveaway, its legacy a 20% hike in house prices in two years. That was always going to come at a cost.
Where do I see the base rate set by the Bank of England being come the end of the year, well 5.75% which has been the marker flagged all this year, and with inflation nowhere near that 2%, that the Prime Minister has made his core objective, it would seem we are all fugitives on a runaway train running out of track.
The thing with housing markets, they are a juggernaut, ‘a huge, powerful, and overwhelming force’ and when you apply the brake, little happens, then you apply more pressure and still nothing really changes, then after several attempts everything stops all at once. There is no gradual correction, no everything hits the buffers, there is a crash and then an eerie period on nothingness and zero activity, until sufficient time passes and some prime mover helps the situation.
Prime movers would include, change of government, end of the Russian war, food and utility inflation coming under control, but there are also new antagonistic factors creeping in, sped on by Covid-19, work is definitely something we do, but where and who and what type of work is going through a seismic change. Next on the list is Artificial Intelligence, it is the most talked about thing, taking over the psycho babble of Crypto and Blockchain, exactly how it will make things better has yet to be seen.
Focusing back on the 21st of September when the base rates goes up to 5.5%, what is the cold reality. It will mean that two year fixed rates and five year fixed rates will be out of the reach of many looking to buy for the first time, or the budget of second time steppers looking to move from that semi-detached home to that four bedroom residence. And it will start to slow the housing market even further.
But most worryingly, it will be the financial pressure put on those servicing their existing mortgage, whilst also dealing with the CALC that is going to be the most distressed sector. It is easy for the wise committee that sits and decides the fate of the nation, behind closed doors in the heart of Bank of England, to do the right thing, not so easy for those who are directly affected by it to carry on as usual.
tlyfe – the new, easy way for tenants to improve their renting experience says TDS
The TDS is excited to announce the launch of the UK’s most pioneering tenant lifecycle app, tylfe partnership with Proptech software business OpenBrix. tlyfe’s goal is to take the stress out of the move in process and help manage the entire lifecycle of a tenancy. With unique benefits to tenants and agents, tlyfe allows tenants to view and manage their tenancy deposits, delivering a UK first.
By integrating with other industry products, tlyfe offers functionality that covers a range of benefits. The features of the app include verified digital ID verification, right-to-rent checks at the click of a button, a low-cost tenant loan solution providing flexibility around their finances, an interactive move in process, and auto document storage.
Building up credit ratings with tlyfe; in addition to these features, tlyfe can also help tenants build their credit rating. The app keeps an ongoing digital record of all rental payments, and provided they are paid on time, tlyfe can help to build a tenant’s credit score by allowing tenants to add these payments to their rental histories.
“tlyfe is a ground-breaking new tenant app that will help tenants manage their deposit and renting experience in a different, better way” comments Steve Harriott, Group Chief Executive Officer at TDS, “This will undoubtedly make life easier for our customers. We’re really excited about introducing tlyfe to our tenants”.
Adam Piggott, Chief Executive Officer at OpenBrix, agrees. “Thanks to this unique collaboration with industry leader TDS, the release of tlyfe will make a real difference to tenants and give them a huge advantage when managing their rentals. To ensure tlyfe is aligned with government policy, many of the features have been developed following discussions with the Department of Levelling Up, Housing and Communities (DLUHC)”.
OpenBrix is the next generation multi-functional, fully interactive prop-tech platform at the cutting edge of technology and the real estate industry. The OpenBrix suite of applications helps to bring harmony to the property sector, seamlessly connecting consumers, agents and suppliers on one single platform. To find out more about the OpenBrix suite of products as either an agent, or tenant, please visit www.openbrix.co.uk
The Dispute Service is dedicated to supporting the PRS with tech innovations, strategic partnerships and guidance for landlords, letting agents, and tenants. If you have not yet joined the free TDS Custodial deposit protection scheme or the Insured protection scheme, it’s simple to switch! Protect your deposits today.
This article was first published on the TDS official website. Link.
Andrew Stanton is the founder and CEO of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder and editor of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.