“There is a lot of negative press about the housing market at the moment, but my take-home message is that if you wait for mortgage rates to drop and house prices to crash, you’ll be waiting a very long time,” says Grant Thoms, First Mortgage’s Senior Relationship Manager. “So, if you can afford it, it doesn’t make sense to put off your purchase.”
Grant explains that the very low mortgage rate levels that have been enjoyed in recent years are something of an historical blip, brought about by low interest rates. “Now that interest rates have gone up,” he says, “it is very unlikely mortgage rates will drop to the very low levels of recent years any time soon – if they ever do. Over the next two to three years we’ll see a decline in the cost of living and mortgage rates will start to creep down, but it will be a long and slow process, so don’t hold your breath.”
According to Grant there are reasons to be cheerful. “Mortgage lenders are still happy to lend money to buyers,” he says. “This wasn’t the case in other periods of financial uncertainty, for example, after the 2008 financial crash.” In terms of house prices, Grant thinks that a massive crash in prices is not on the cards. “There is still a lot of demand and a lack of supply,” he says. “So, although prices have crept down in some areas recently, in many other areas they have stayed strong and, in general, a massive drop is unlikely.”
Grant also says that it looks as though rents will continue their inexorable climb. This means that anyone who is currently renting has a big incentive to look at purchasing instead.
“There needs to be a mind-set shift,” Grant concludes. “The days of very cheap mortgages are over for the foreseeable future. People need to recognise that they are going to have to pay a bit more than in the past.”
For Grant this means that affordability should be the touchstone for anyone considering a home purchase. “We work with all our clients to find them a great deal they can afford and that will deliver them the home they want, without saddling them with unsustainable costs.”
To find out more about First Mortgage and the advice they can offer get in touch with one of our sales agents.