Mortgage market quarterly review
David Lauder, one of ESPC’s mortgage advisers, takes a look at what the past few months have been like across the mortgage market.
What are your latest impressions of the market?
It is still a good time to buy but there is a lack of stock at the moment for potential buyers. This means some properties are going to closing dates and over the asking price quite quickly at present. I would like to think more stock will be available in the next few months which would mean buyers would be more spread out over different properties and in turn this would mean less competition. Sellers seem to have a lack of confidence about finding their next suitable property for purchase and don't want to be left renting for months, and are therefore delaying putting their existing property up for sale, and this is stagnating the market.
Due to the lack of stock it is a good time to sell and there are willing buyers, but it only becomes a fruitful transaction if the margins then work out favourably on the next purchase and they don't have to pay in excess of the figures received for the sale.
Do you think the base interest rate is liable to rise?
Mortgage rates are very good at present and there was speculation late last year that there would be a small increase at the end of 2016 but recent indications now suggest that no rises are likely for another year or two. However everyone has their own opinion and I am sure these opinions may change as the year goes on. But for now it seems like no change is imminent.
Do you expect demand for buy-to-let mortgages to cool off after the introduction of the second homes tax?
Yes. There was a mad rush to complete buy-to-let purchases before the start of April to avoid this stamp duty change. The market was very busy during this period and I have seen a slight decrease in activity since then. This should help people looking to buy for residential purposes, as there will be now less competition, particularly for one and two bedroom flats.
There will still be investors who will not be put off by the 3% additional tax on second homes and will be looking more at the long term potential of the investment, particularly experienced landlords. But for the immediate future there is likely to be a small lull period for buy-to-let purchases.
Is there any advice you’d give to someone looking to move home just now?
It is a good market place for both buyers and sellers at the moment. Some houses are selling within one to two weeks and often over the asking price. But the longer the property remains up for sale then the market can be more favourable for the buyer, as the house price will be more realistic.
There is also good news for buyers as the lower interest rates on the mortgages available at present have never looked so good, and this means they will have lower repayments each month.
I would advise that if you are in a position to buy then now is the time. If a build-up of activity continues then rates and house prices at some stage will increase and you will miss a window of opportunity, and the same houses may end up costing you more. At least if you are on the property ladder then you are also benefitting from any market increases.
In terms of selling, it is just a matter of getting your property prepared in a presentable way for sale to give it the best opportunity of achieving as good a selling price as possible. Make sure you have your mortgage-in-principle in place so you are then ready to strike with your next property, so you can make the buying and selling a simultaneous transaction.
Is this year proving easier for first time buyers to get onto the market?
Yes. At ESPC we specialise in helping take first time buyers by the hand through the process from start to finish. Provided they have at least a 5% deposit and have historically conducted their finances in an acceptable manner, then we will achieve a successful outcome.
There are more mortgages available as lenders’ confidence has increased. What this means is more competition and options available, which can only be good for first time buyers as rates and terms will be more favourable and eligibility will be more likely. It is important to have a professional who can guide you through what can be a stressful and tricky process, but provided you are dealing with your finances as you should then the outcome is likely to be successful.
As independent mortgage advisers, ESPC Mortgages can help with all aspects of understanding your budget, applying for a mortgage and dealing with the relevant insurance requirements. Pop in for a no obligation chat with David, Independent Mortgage and Protection Consultant, or you can contact David on 07956 969859 or email email@example.com
The information contained in this article is provided in good faith. Whilst every care has been taken in the preparation of the information, no responsibility is accepted for any errors which, despite our precautions, it may contain.
The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£250 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.