What the Bank of England interest rate hike means for people looking to buy a home

Property experts have warned that prospective home buyers relying on a mortgage could face diminished purchasing power and confidence after Thursday's base rate increase.

The Bank of England's decision to elevate the base rate to 5%, the highest in almost 15 years, aimed at reducing persistent high inflation, has prompted experts to predict a shift towards more "realistic" property prices.

The rate hike could force some landlords to sell, increasing the supply of homes available for purchase, but potentially pressuring the rental market. North London estate agent and former residential chairman of the Royal Institution of Chartered Surveyors (Rics), Jeremy Leaf, said, "The green shoots apparent in the housing market at the beginning of the year have started to wilt, despite continuing support from strong employment figures."

Leaf added, "It seems confidence to buy property will only begin to return when core inflation drops to more sustainable levels over a longer period." Matt Thompson, head of sales at London-based estate agent Chestertons, noted, "We expect the rate rise to have an impact on over-leveraged buy-to-let investors whose increased mortgage payments could lead to their investment making limited profit or even a loss."

Mr Thompson further speculated, "This could result in some landlords deciding to offload their assets. At this stage, we haven’t yet encountered homeowners who have been forced to sell up but, if rates continue to rise, some owners may be forced to review the situation and weigh up their options."

Despite this, demand for properties in London remains robust due to its appeal to diverse buyer demographics, including international buyers. Nathan Emerson, CEO of property agents organisation