THERE is “good value” to be found in the property market for buyers “brave enough to take the plunge”.
That’s the view of the National Association of Property Buyers who also predict that long term borrowing rates could soon be about to come down.
Outlining the current market conditions, spokesman Jonathan Rolande said: “The property market is once again in the midst of finding its own level. With rates shooting up and confidence plummeting, lending shrank dramatically in the weeks immediately after the mini-budget debacle.
“Without new lending, lenders will in the end, cease to exist. So lend they will. They are already trimming rates in part because international markets have been kinder and in part because they are keen to attract new borrowers albeit at rates higher than a year ago. Lending criteria will be tougher too, and nobody wants to see another 2008 where irresponsible lending led us to the brink of disaster.
“If things carry on as they are, expect to see lower long term borrowing rates in the coming weeks but this will only continue up to a point. We shouldn’t forget that the Bank of England has steadily been increasing interest rates to curb spending and inflation – this has begun to take effect but we are nowhere near where we need to be to tackle it. More rate rises could be in store.
On the pros-cons of opting for a tracker Mr Rolande continued: “Optimists are once again checking out tracker rates. These were usually ignored in the past as borrowers felt interest rates could only go one way – up. And they were right. Trackers are often 1%+ cheaper than a fixed equivalent so there is some wriggle room built-in even if base rates creep up. Variable rates suit those who don’t mind gambling on their household outgoings changing. Many come without hefty redemption fees so can be changed more easily than a fixed rate loan.”
Pointing towards the opportunities that now exist for buyers he added: “With lower rates across the board and sellers now forced to be more realistic about pricing there is good value to be had for buyers brave enough to take the plunge.
“Buying a property is a huge and long-term commitment. If the time is right for them, home buyers shouldn’t pay too much attention to the weekly ups and downs of prices and interest rates. There’s never a perfect time to buy – when rates are low, prices are high and when rates are high, prices are lower.”
The prediction comes after reports at the weekend which claimed fixed-rate mortgages are getting cheaper as lenders become more confident that Bank of England base rate rises this year will not be as severe as feared.
The base rate has gone up nine times since December 2021 as the bank tries to curb soaring inflation. It is now 3.5 per cent and is expected to peak at around 4.5 per cent rather than the 6 per cent many predicted last year.
Nationwide, a reduction of 0.6 percentage points. The lowest first-time buyer rate is 4.6 percent from HSBC.
Average mortgage rates for all two year and five-year deals soared over the past year, driven by increases to the Bank rate and the chaos that followed the government’s September minibudget. The average two-year fix at 60 per cent loan-to-value is now 5.78 per cent, up from 2.38 per cent a year ago. The average five-year rate is 5.61 per cent, up from 2.66 per cent.
