Currently properties for sale on the market are at a 30 year low and new house building is still falling way short of housing demand and government targets, which begs the question why! It is my considered opinion that this is a true reflection of the current lack of confidence and nervousness that exists in peoples minds today. This has been brought about by various occurrences of recent years, starting firstly with the credit crunch, pundits predicting further recessions and potential house price crashes and of course Brexit. This is starting to become noticeable particularly with estate agents, where we are seeing major chains closing unprofitable offices and small independent agents closing down. Not only are they suffering from lack of stock, but they are finding it hard to compete with the rise of online agents and their lower commission structures. This increased competition has made the traditional high street agents far more aggressive towards potential buyers railroading them into uncompetitive mortgage deals, insurances and believe it or not will writing, in order to earn additional badly needed commission.
We are finding more and more people have decided not to move yet, but to improve and in many cases extend their current property. Funding to do this is raised by either re-mortgaging, further advances on their mortgage or a secured second charge on their property.
First time buyers are still purchasing their first property, this has been helped by the governments Help to Buy Equity Loan Scheme where only a personal deposit of 5% is required. More and more lenders are also accepting family gifted deposits which has seen a rise in the benefits of the bank of mum & dad. Of course not everyone wants a new build property, with lenders offering deals from as little as a 5% deposit, better still a larger family gifted deposit helps to bring the mortgage rate down.
What I find hard to understand is the apparent assault the government is making on buy to let landlords, apparently over fears of a housing bubble that might burst. Not only are the government hitting them hard on income tax relief, but they are making it prohibitively expensive with stamp duty to purchase a residential investment property. Landlords, I believe provide badly needed accommodation for those who can’t afford to buy their own property or are not in the position to do so. Again there is a fall in home ownership as more or more people for one reason or another are renting the property they live in, so surely those who can afford to offer this accommodation should be encouraged to do so. Admittedly there are some bad and inscrutable landlords and the government needs to be concentrating on regulating these and not punishing the good ones.
Interest rates are now starting to rise and there are already signs of lenders not only increasing their tracker and variable rates, but fixed rates are rising as well. So for those purchasing a new property and for the thousands coming to the end of a fixed rate period or are still on variable and tracker rate mortgages, now is the time to make that decision and choose the security of a good fixed rate to carry and safeguard you through the uncertainties of Brexit and increasing inflation.
Finally, where does an independent mortgage broker sit with all of these changes? A good broker should fully understand not only their client and their needs, but should have a clear and comprehensive knowledge of the whole market and the options available to their clients. It is no good going direct to your bank or estate agents for this type of advice as all you will receive is limited help. Our advice is always free and without any obligation, so please do find the time to talk to us as a missed call could quite easily cost you thousands by making the wrong decision.
For more on this, visit the Financial Reporter.