National Property Specialists Strutt & Parker has expressed surprise at the Bank of England’s decision to increase the official Bank Rate by 0.25 percentage points to 5.25%.

‘A rise in the first quarter of this year was unanticipated,’ says Michael Fiddes, Head of Strutt & Parker’s Residential Division. ‘But the Bank’s decision is symptomatic of how buoyant the housing market remains, helping to raise concerns over inflation. It is consistent with the Bank’s policy of making pre-emptive decisions to avoid having to take more drastic action later on. If this strategy is successful it will be good news for the housing market as we won’t be seeing bigger increases in six months’ time.’

Michael Fiddes predicts that the increased rate may dampen parts of the housing market, ‘but it won’t lead to a property slump such as we saw in the 1990s,’ he says. ‘Then mortgage rates averaged 9%, as opposed to around 5% today.

‘The top end of the market should remain unscathed. There are currently plenty of cash buyers in the country house market; this, coupled with January’s customary lack of supply, means that this market will remain unaffected by the interest rate rise.

‘Strutt & Parker has had a very busy start to the year, and we expect the market will remain healthy.’