With rates as they are, is now a good time to buy?

The property market is perpetually in the news. We all see the stories about the mortgage market and the historically high rates. And up until recently, even the best loan-to-value bracket, typically 60%, started with a product rate of above 5 %.

However there seems to be a positive trend: with rates seeming to be on a gradual decline. Despite the media’s inclination towards highlighting the negatives, there’s a silver lining. Recent financial insights, particularly the unexpectedly positive inflation stats, are stabilising the market. Notably, we are now seeing more sub 5% rates emerging. These ongoing rate reductions suggest the market may believe the worst is over.

Is now a good time to buy?
It is a question we are regularly being asked. It is important to note that interest rates are temporary, while securing a hefty discount on a property is everlasting. When interest rates are low, house prices tend to rise, at the moment we are potentially seeing the reverse. 

UK house prices fell by 5.3% in the year to September, with drops in price in every region of the country as rising interest rates squeeze the market.

The house price index by Nationwide, the biggest British building society, showed that seasonally adjusted prices stalled over the month in September, after a 0.8% drop in August.

With the market exhibiting a lull, and a trend in buyers clinching significant reductions on property asking prices, this might be an opportune time to seal a deal on that perfect home or property investment. 

But a word of caution: a decrease in mortgage rates can flood the market with buyers, intensifying competition and potentially reducing your bargaining power. In essence, while some may see challenges in the market dynamics, others spot golden opportunities, especially if the financials align. 

Get a Mortgage Agreed in Principle
If you are thinking of purchasing a property, having a mortgage agreed in principle can provide you with a competitive edge. By securing this, not only do you demonstrate your serious intent to sellers and their estate agents, but you also gain a clearer understanding of what you can afford.

We recommend speaking to one of our award-winning mortgage brokers by calling 0208 364 3444 or click here to schedule a free consultation call

Half of searches for terms 2 years and under
Almost half of all fixed-rate mortgage searches were for terms of two years and under last month, as buyers look to ride out higher mortgage rates, according to Twenty7tec.

The broker search engine says two-year fixed-rate mortgages accounted for 47.4% of all fixed product searches in September, while three- to five-year fixes accounted for 32.4% and five- to ten-year fixes made up 20.2% of enquiries.

Twenty7tec director Nathan Reilly says: “During September 2023, almost half of all fixed mortgage searches were for terms of two years and under as buyers looked to shorten the effects of current rates in the hope of lower rates in the medium term.”

Overall, the business says September was the quietest month for mortgage searches this year with a total of 1.3 million searches, compared to 1.4 million the month before.

Rishi Sunak Abandons EPC Targets
Last week, the government made a drastic and unexpected U-turn on its green policies, including scrapping the proposed changes to EPC regulations. The changes required landlords to ensure their properties had an EPC rating of C or above for all tenancies by 2028.

Whilst abandoning the plans altogether has come as a surprise to the sector, Michael Gove had hinted that landlords could expect changes to the proposed legislation in July when he commented that the government were “asking too much too quickly”.

This news will be a relief for many landlords due to the substantial financial implications of getting properties up to a minimum EPC C. With little to no financial assistance on offer, these changes were a significant burden for many landlords already trying to navigate the challenging economic landscape of the buy to let market.

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