Interest Rates

percentage signNot only prices of properties remain strong they have increased as published yesterday by the Office for National Statistics. The first-time buyers continue to be the driving force of the market and demand remains strong. We can see strong decline in new buy to let investors coming to the market. However, investor Landlords with four or more properties seems to continue to grow their portfolio. Interest rates… will be going up. We expect raise to 0.5% by the end of this year and further raises in the new year depending on the level of inflation and the economy. Unfortunately we are restricted to short term predictions at the moment until the Brexit negotiations unfold and the economic future is clearer.

Homeowners therefore facing the following question:

To Sell or Not To Sell

If you are committed and seriously considering selling your property, this is the time.instant valuation request banner While others still considering their options you have less competition on the market and serious buyers that are keep looking for their perfect home. House prices remain strong. It is not ideal market for testing prices, but those realistically valued getting interest and being sold quickly. Although we consider this to be still a good property market, as a potential vendor you have to take into consideration house prices inflation and the decline of wages. This causes affordability issues and makes impossible, particularly for first time buyers, to stretch and pay higher price. Interest rates increase will lower this affordability ceiling level. As this has not happened yet mortgage rates and deals have not been adjusted and they are still very attractive. From first time buyers perspective the desire to purchase your home comes first, the cost or mortgage repayment is always second. Therefore as long as they will be able to afford it, you have got yourself a buyer.

Prospective buyers will be like:

To Buy or Not To Buy

There is uncertainty in every single sector in UK at the moment. This can well continue for another year. The waiting game so far has proven quite expensive. On average the home of your dreams increases in value £1,000 every single month. We had no interest rise in last ten years. If the rise of interest rates concerns you, then you should be buying now, the rates are rock-bottom and not going to be any lower. We expect increase to 0.5% this year. Quite possibly as early as next month. This certainly should not frighten you. 38 years ago interest rates jumped from 14% to 17%. Buyers during the property boom in 2006/2007 weren’t discouraged by interest rates averaging 5%. The ability to purchase a property cheaply is one of they most important factors whether you are a property investor or owner occupier. Securing mortgage and being able to afford the property you want is the most important thing. Therefore, even if the interest rates go up to 0.5%, currently your average property increases in value 5% year on year. Buy an exceptional property cheaply and I promise you the interest rate rise will be irrelevant. Why is it matter then? The mortgage lenders have to do stress tests which may reduce your affordability and therefore securing mortgage below the asking price of the property you want. They may also rise significantly cost of obtaining a credit if they expect further raises. Even if you pass the stress test and the lender is satisfied you can afford it, you probably will end up with less money to spend on other things. For these reasons I believe it is the right time to buy a property.

We are not in any bubble just yet. Demand remains strong as the economy is doing fairly ok. We have the lowest unemployment level since 1975 so the spending power naturally increases. The government has backed the Help To Buy scheme further which is encouraging developers to continue with their projects and also helps the economy as a whole. Developers have loads of skin in the game and they are perhaps better property market barometer than general media.

If you have any questions, concerns or just would like a FREE no obligation market appraisal on your property, please do not hesitate to contact us.

personal agent advertising banner