Over the last few years, house prices have gone through the roof, but experts have said prices could drop over the next two years as interest rates continue to rise.
So is this a good time to be buying a house, or are you crazy to be thinking of moving house right now? While house prices may fall soon, mortgage rates are on the rise. Do you take the leap, or wait for a while?
What’s happening in the property market right now?
Banks and building societies have pulled mortgages and raised product prices due to market uncertainty, and inflation is soaring. Interest rates, which are already at their highest level since 2008, are expected to continue to rise as the Bank of England tries to get a handle on soaring inflation.
Analysts warned the base rate could surge to 6% next spring, after sterling plummeted in response to former chancellor Kwasi Kwarteng’s mini-budget.
Soaring interest rates could dent confidence in the housing market. With borrowing becoming more expensive, the number of buyers could fall. Likewise, if a recession hits, the number of sellers could drop again too as people become more risk-averse.
Recently, we have seen a decrease in the number of available houses to buy, which has led to some homeowners holding off selling due to a lack of available houses to buy. Scarcity of homes for sale means buyers often end up in bidding wars to secure a property.
Will house prices drop in 2023?
Some people, especially first time buyers, will be hoping house prices will fall. While there is no guarantee that will happen, a fall in house prices is looking increasingly likely. Experts think the kind of house price rises that we have seen over the past 18 months are unsustainable, and a dip is highly likely in the coming months if interest rates continue to rise.
What will happen to mortgage rates?
In an attempt to combat soaring inflation, the Bank of England is increasing interest rates. We’ve recently seen the seventh consecutive rate rise since December 2021, and it’s already making home loans much more expensive.
If you are coming off a fixed mortgage deal soon and looking for a new one, you will likely struggle to find a deal as good as you are on now, so expect your monthly repayments to increase.
The mortgage rate you can get will be driven by:
- - The size of your deposit
- - Your credit score
- - The type of loan
- - The length of the mortgage deal
Variable rate mortgages, which make up about a fifth of home loans, are directly linked to the base rate so customers immediately feel any rise.
An independent mortgage advisor will be able to talk through your mortgage options and ensure you get the best mortgage deals.
So should you buy now, or wait until 2023?
Anyone considering buying a house right now is having to decide whether to bide their time and hope that the market calms down, or whether to get in there quick in case house prices continue the upward trend that we’ve seen for the last few years.
Right now, it boils down whether to wait for lower house prices, but being aware that these lower prices might come at the expense of affordable mortgages.
If you want to buy a house and can afford it then it might be better to bite the bullet. There is no point in waiting for a dramatic drop in prices which may not happen over the next year or so. Plus, if you are a homeowner already, if house prices drop then yes- you may secure your next home at a lower price, but it also means the price of your current property will fall too.
Getting the best mortgage deal
If you do decide to buy a house in the foreseeable future, then you’ll need the best mortgage deal you can find, and that’s where Taylor Made can help. We are professional independent mortgage experts and can offer friendly, helpful advice as well as today’s best mortgage rates.
