Over half of brokers believe that the base rate will need to reach 3% before it has a negative impact on the UK property market.

A recent United Trust Bank survey also found that more than 75% of brokers believe that an increase in the base rate to 1% will not be significant enough to have a detrimental effect on SME builders’ and developers’ businesses.

Noel Meredith, Executive Director of United Trust Bank, said his development finance team had never been busier and a recent increase in enquiries was a good indication of continued confidence in the property market.

“There are pockets of strong demand in all regions and most areas are seeing some price growth,” said Noel. 

“If developers serve their markets by building good quality homes in the right locations and pitched at the right prices, there are usually buyers ready to move.”

Noel said an increase in the base rate from 0.5% to 3% may sound like a big leap, but it is very unlikely to happen quickly.

He also said there is enough demand to keep buyers taking out mortgages.

“Speculation about increasing interest rates has come and gone periodically for around the last 18 months,” added Noel.

“It’s no surprise, therefore, that the majority of developers active today have structured their finances in such a way as to be prepared for when higher interest rates inevitably come.

“Whilst the first increase in the base rate, in what will be more than 80 months, will send a slight tremor across the industry, it certainly won’t come as a surprise and I am sure it’s not going to cause many developers or their brokers to lose much sleep.”