If you decide to buy a house, it is a huge investment and requires careful consideration, especially, when interest rates are on the rise.
From finding the perfect property to choosing which mortgage is right for you and the application process, not to mention increasing inflation and the cost of living, you might be wondering if there’s ever going to be the right time to make such an important purchase.
According to the season
Our calendar year plays a significant role in the property market. According to an article in Ideal Home, spring and autumn are typically the most active times of the year. Spring, in particular, sees a surge in activity as people hope to complete their home purchases in time to move in when the weather conditions are altogether more agreeable and schools are closed for the holidays.
On the other hand, the height of summer tends to be quieter to start the process, as a lot of people tend to use this time to go away and take a break from their day-to-day lives. And, if you’re looking for less competition and maybe better deals, waiting until November or December could be worthwhile, as there are typically fewer active buyers towards the end of the calendar year.
Reflecting on the market
Understanding what the market looks like is going to be a big help in making your timely decision to purchase. During the pandemic, the UK housing market experienced a boom as a result of various factors, including stamp duty cuts, reduced interest rates and the rise in demand for more spacious homes.
However, since 2021, the Bank of England has raised the base interest rate from 0.25% to 5.25% in an effort to stave off rising inflation. Lenders responded by withdrawing some of their loan products and increasing interest rates to protect themselves from potential losses.
Consequently, according to Moneyfacts, the average two-year fixed-rate mortgage exceeded 6% in June, and five-year deals have followed suit. This could mean a decline in house prices when rate hikes and rising living costs are taken into account hand-in-hand, which is something worth thinking about.
Should you wait or buy?
As with most things in life, there are pros and cons. It may be tempting to wait, especially if you’re anticipating a significant drop in property prices. But, this could be a risky tactic because if you plan on selling your property to buy, and the value of your home falls below the amount you owe on your mortgage, you could end up with negative equity, which is far from ideal. Additionally, there’s no guarantee that house prices will drop, and there’s the possibility that mortgage interest rates continue to rise.
Overall, if you feel confident that you can afford your mortgage repayments and plan to live or rent the property, buying now could make sense, especially if you have the funds to move quickly.
Negotiation tips
Assuming you’ve decided to take the plunge and go for it, remembering these negotiating tips could be useful:
- Be prepared by engaging a solicitor and getting your finances in order.
- Respond promptly to messages and be polite to the seller and estate agents.
- Gather information about the property, including why the vendor is selling and any offers they’ve received.
- Determine what the property is worth to you and set a realistic budget for negotiations.
In conclusion, there isn’t one specific answer for the ideal time to buy a property. Unique circumstances and market conditions vary from person to person and from year to year. While rising interest rates may deter some buyers, others may find opportunities in the current market, and keeping focus on the bigger picture is key.
Ultimately, having the support of an experienced mortgage and insurance broker can help you decide when and how to proceed.
Choice Mortgages provides independent, professional guidance and advice tailored to specific requirements. Take advantage of their free, no-obligation consultation by phone or in person at the office. The team of experienced and friendly advisors can handle all of your queries. Whether they’re straightforward or more complex, they’re on hand and ready to help.
