United Trust Bank’s most recent broker sentiment survey has found that 70% of brokers operating in the fields of property and asset finance believe that it would take just one more 0.25% increase in the base rate for it to negatively impact the residential property market.

61% felt that such a move would also stifle SME investment.

However, the research, carried out amongst 108 brokers, found that 28% of respondents felt that a base rate of 1% would have little to no effect on the residential property market and 37% indicated that in their view a base rate of 1% would have little to no effect on SME investment.

What would happen if the base rate was increased to 1% or more?

Noel Meredith, executive director of United Trust Bank, said: “Although the MPC voted 9-0 in favour of the recent 0.25% increase to the base rate, market sentiment had actually been in the ‘hold’ camp until quite recently. The fact that the decision of the committee was unanimous surprised many economists and Mark Carney has also signaled that he wouldn’t rule out another increase if necessary, to bring inflation back below 2%.

“Raising the base rate to 1% may well have a psychological impact on some potential purchasers but it is worth remembering that we still have extremely low mortgage rates and there’s a broad choice of medium term fixed rate deals available priced at less than 3%. With housing remaining structurally under supplied, a healthy retail mortgage market and demand side initiatives such as Help to Buy assisting purchasers at the bottom of the housing ladder, we believe there is plenty to be positive about, even with another base rate increase factored in.

“At times like these, house builders need some certainty. They need development finance lenders like us more so now than they have done in the last five years. Engaging with a dependable ‘through the cycle’ specialist lender will enable them to keep building homes and their businesses whatever the property market and the economy may send their way.”