Affordability rather than rising mortgage interest rates should be the focus within the property market, according to Iain McKenzie, CEO of The Guild of Property Professionals.

McKenzie insisted that there is no evidence suggesting a correlation exists between historical interest rates and property transaction volumes.

“There were more mortgages approved when interest rates were at 15% than there were during the pandemic,” he said. “The monthly repayments would be higher, but lenders will have an appetite to borrow, and people will continue to move.

“Rather than focusing on the rate, buyers should be focusing on what they can afford and the cost of the mortgage on a month-to-month basis,” McKenzie added.

McKenzie believes the current situation where economic factors are pushing up rates should not act as a barrier to property purchases. “For someone looking to buy a home to live in, the driving force behind their decision will be whether they want to live in the property for the next five to ten years,” McKenzie explained.

“Property should always be seen as a medium- to long-term investment, especially when you consider that statistically every homeowner that has kept their property for a ten-year period would have seen an increase in the value of their property.

“So, rather than focusing on rising interest rates, the question should be about whether the buyer can afford to purchase the property now and be able to afford it in the years to come.”

McKenzie highlighted that since 1975, the Bank of England’s base rate had not been below 4% until it dropped to 3.75% and then 3.5% in 2003. Before the financial crisis, interest rates went up to 5.75%, and then were dropped to 0.5% in 2009. While interest rates remained low until the recent hiking phase, the upward trend should be seen as a return to the norm, McKenzie insisted.

“Inflation is at its highest level for over 30 years and the mechanism the Bank of England uses to try and curb and control it is the interest rate,” he explained. “High inflation causes many economy issues and at a rate of 10%, which is well over the 2% target, it needed to be addressed.

“If the Bank of England continues pushing up rates we could get to a point where a 5% mortgage rate is the norm, and that’s what agents should be telling buyers – it is the norm and not what they should be focusing on,” he added.