Our Sales Manager, Phil Leivesley, shares his views on current property prices and mortgage interest rates and what they could mean for you.

If you plan to move house this year, or you’re a potential first-time buyer, you might be wondering what’s happening in the property market and whether now is a good time to move. Much has been said about mortgage interest rates going up, but they are starting to come down again. Here’s our overview of the market…

Asking prices have gone up slightly in January. That’s not sold prices, but it’s encouraging. What are your views on that?

It’s important to stress that asking prices are often different from agreed prices. It is a buyer’s market right now; anyone looking to buy may want to see if they can offer below the asking price. And I would imagine, in most cases, they will probably find some joy. But I think this is just sellers trying to get the best price they can. And, of course, equally, buyers will try and do the same. So there’s always a deal to be done on any property. Emotion comes into it; we’re dealing with humans, after all, but if a buyer starts out low and a seller starts high, somewhere in the middle, the two will meet.

What do you think the future holds for mortgage interest rates?

The mini budget on the 23rd of September made the market very unpredictable. In the immediate aftermath, interest rates shot up. Lenders were withdrawing products with virtually no notice, and anyone who was in that market at the time will know how stressful it was. Thankfully, rates peaked in November, and since then, we’ve seen them gradually but consistently reducing. Lenders appear to be cutting their margins and reducing fixed-rate pricing straight out of the gate this year, and that’s a trend that I don’t see stopping for a while yet. I’d advise keeping your eye on the market because I suspect that fixed rates will continue to come down, albeit gradually.

If we see another base rate increase from the Bank of England or, indeed, more than one, is it likely to mean that mortgage interest rates could go up in general?

It might be difficult to hear me talk about the belief that fixed rates are going to reduce when it seems pretty clear to me that the Bank of England base rate probably will increase again and potentially as soon as early February. But you have to remember that the way that lenders price their products is not necessarily dependent upon the Bank of England base rate itself. So I think it’s entirely plausible that we might see a quarter-point increase to the Bank of England base rate in February, and this may not be the last increase we see. Despite that, over the same period, it seems almost certain to me that we will see the cost of fixed-rate pricing decrease.

Is there anything as an adviser you’re seeing in the market now? And how are clients reacting to what’s currently going on?

Throughout the whole cost of living crisis, I’ve been struck by the calmness of our clients. In the immediate aftermath of the mini-budget, I was talking to people facing significant increases in their monthly costs. Some were seeing increases close to an extra £1000 per month. I expected an emotional response, which would be completely understandable given the circumstances.

My expectation of how people might react to the news and how they responded couldn’t be more different, and I’m incredibly impressed by the resilience of everyone I’ve spoken to. That being said, I appreciate that not everyone can prepare for a significant increase in their outgoings.

Going into 2023, the market as a whole, from what I’ve observed, has almost shrugged its shoulders and collectively said, ‘Well, we can’t change what has happened. We know where we are, we know what the costs are going to be. They’re not going to change all that much, and we’ve got to get on with things.’ And so I’ve been pleasantly surprised by the amount of activity we’ve seen in the market, the number of new buyers enquiring about moving home, and the number of first-time buyers seemingly coming back into the market now. Those due to remortgage this year are getting better news than they anticipated, too, as the cost of borrowing is beginning to come back down.

Do you have any other insights you wish to share?

Yes, I have recently spoken to several clients who believe their situation will be trickier than it actually will be. On the face of it, these have been quite challenging situations; I’ve been talking to people with complex incomes; they might have multiple employers, they might be recently self-employed, they might be a founder of a startup business, where they have to reinvest the majority of their profits back into the business, and that’s reflected in their accounts not showing a significant profit. What I would say to anyone who might feel that their situation is complex is that at least one or maybe even multiple lenders might be comfortable with that scenario. Reach out and speak to a mortgage broker, be upfront and explain your situation. Be bold about giving plenty of detail.

As a mortgage adviser, my job is to find a lender who will be comfortable with the enquiry. The more detailed narrative I can give, the better the outcome. The lender might come back with a list of questions, and if they do, don’t see that as a sign that they’re unwilling to lend. This is lenders looking to learn a little bit more about your situation and understand it better so they can get comfortable with it. So, for anyone who thinks their situation is complex, I would say I’ve probably seen something similar in the past. And if I haven’t, there may be lenders who are prepared to take a view. So give us a call, and you might be surprised by the outcome that you receive.

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