Would-be property buyers are holding back in the hope that the Bank of England will make cuts next week, according to brokers.
The central bank’s Monetary Policy Committee will decide on interest rates on Thursday (May 8).
At its last meeting in March, it voted eight to one to hold rates at 4.5 per cent.
Sean Horton, managing director at Respect Capital, said: “Some buyers are undoubtedly playing the waiting game for lower rates, but this is a risky strategy.
“We’re definitely seeing people holding back, hoping the Bank of England will cut rates further, or perhaps waiting for this as a signal to make a move.”
However Horton said swap rates already factor in expected cuts so the decision next week may not have much impact.
He also warned lower rates could spark a jump in house prices as pent-up demand “floods back” and potential buyers to go ahead if they found the right property.
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, said the expectation of rates dropping has resulted in a reluctance for speedy completions at the moment.
She added: “To be honest, I don’t blame borrowers, why complete at a higher rate if you don’t need to?”
However, Ben Perks, managing director at Orchard Financial Advisers said waiting could be a “risky game”.
He said: “Rates have been turbulent over the past few years and whilst it feels like we could be coming out of the woods, we’re only one Starmer or Trump decision away from trouble.
“Most lenders will allow you to switch to better rates if they become available prior to completion. So, if you’re buying a property, use a broker, seek advice and crack on.”
His views were echoed by Justin Moy, managing director at EHF Mortgages who said mortgage rates would not drop overnight if the bank makes interest rate cuts.
He said: “With rates starting to fall, it’s human nature to want to hold out for cheaper rates and lower payments. But rates are not going to drop 2 per cent overnight.
“Rate cuts will be small and any saving will be minimal in the grander scheme of things compared to jeopardising the whole transaction.
“If it’s your dream home and it’s affordable, don’t delay.”
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tara.o’connor@ft.com
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