Like many of life’s big milestone moments, deciding to go ahead and buy a house can be exciting and nerve-wracking. Knowing when is the best time to buy is also tricky. If we lived in a perfect world, you’d time your purchase perfectly when property prices and mortgage rates were at their lowest. However, predicting when such conditions might occur isn’t easy.
Using data is a great way to make an informed decision in your buying process. As of December 2023, the Independent reported the average house price at £287,105, a slight increase from £282,305 in December 2022. Concurrently, the average two-year fixed mortgage rate fell below 6%, as reported by BBC News. In July, the rate reached a high of 6.86%.
Weighing up the pros and cons
Pros
- Price discount: With the economy being a bit unpredictable, rising mortgage rates, and the ongoing cost of living challenges, there’s been a noticeable dip in the demand for home buying. This means property sales slow down, and with fewer offers on the table, buyers are able to leverage discounts from the initial asking prices.
- Reduced fixed mortgage rates: As we’ve mentioned, fixed mortgage rates are more attractive now than in previous months, providing better value overall than discounted and tracked mortgages.
Rachel Springall, Finance Expert at Moneyfacts, explains:
“The consecutive reductions to the overall average two- and five-year fixed mortgage rates will greatly relieve borrowers looking to refinance this year. The volatility surrounding mortgage rate pricing eased as the average mortgage shelf life rose from 17 days to 21 days, the highest figure recorded in over six months. There are big expectations for fixed mortgage rates to fall in the coming weeks, so some borrowers may choose to wait patiently for the right time to change their deal or buy their first home.” Visit Money Facts for more about mortgage deals on the rise and the decline in rates.
Cons
- The danger of negative equity: The value of your property can determine negative equity. This could happen when property prices drop, you still need to complete the transaction, and you buy with a 5% or 10% deposit.
- No more ‘Help to Buy’: Aimed at first-time buyers, the Help to Buy scheme no longer accepts new applications. Buyers who need a helping hand up onto the property ladder won’t have government assistance, although shared ownership schemes are still available.
Weighing up the pros and cons and borrowing rates will be your compass as you venture forward with your property purchase decisions.
Will house prices plummet this year?
Throughout 2024, house prices are expected to drop. Savills Estate Agent predicts a 3% fall in UK property prices before a recovery in 2025, but as we’ve learned, buying a property isn’t an exact science.
Also, the Bank of England is expected to cut interest rates around the middle of June 2024, following 14 consecutive hikes in a bid to combat inflation. This means mortgage rates could also fall this year, according to The Times, Money Mentor.
If this plays out, prospective buyers could find themselves in that ideal position of lower house prices coupled with lower mortgage rates.
Be guided by independent mortgage advice
When you’re ready to begin your home-buying journey, rest assured there is help at hand.
Choice Mortgages, is a mortgage and insurance broker focussing on exceptional customer service. We offer free, no-obligation consultations in person at our office or over the phone. We have access to all lenders and insurance providers, so you get the best product that suits your requirements. Our team of experienced advisors are ready to help with your queries, whether straightforward or complex, we can help.
