The rising cost of living has been something at the forefront of the news at the moment and it’s becoming a concerning topic for many existing homeowners and aspiring first time buyers in the UK. Travel fares, energy bills, food, and other living expenses have increased and it’s unclear exactly when this sharp increase will stop.
It’s something that we’ve been speaking about with our customers near enough every day, so we thought we’d share our thoughts on it, including how it’s affected the market.
Bank of England has increased mortgage rates
It’s the Bank of England’s job to keep the UK’s rate of inflation low. Due to the rise in living costs, they’ve had to increase interest rates three times in 2022:
- to 0.5% in February
- to 0.75% in March
- to 1% in May
The Bank of England reviews this every 6 weeks, so whether this will go down or continue to go up depends on what happens in the economy.
The market is slowing down
We’ve noticed that the market is slowing down slightly.
People are saving where they can and focusing on reviewing their existing mortgages. There are a lot of people in the UK who are on a variable rate of mortgage, which means that it is very likely that the cost of their repayments has or will increase. If your remortgage is due in the next 6 months, it’s really important that you start exploring your options nice and early so you get the best deal possible! Another piece of advice would be to continue saving so that when the cost of living (hopefully) comes to a bit of a curb, you will be in a good position to buy.
Is now a good time to buy?
Good question! It really depends on your individual circumstances and whether it’s the right time for you. If you’ve been saving up and believe you are in a position where you can afford a house then it might be a good idea to get all your ducks in a row so that when you spot a property you like, you are in a position to make an offer. It’s unclear what the future for house prices look like and there’s no guarantee that there will be a drop in prices – there’s always the risk that they could continue to increase. There are also currently more low deposit deals available. This is helpful for first time buyers who don’t have a lot of cash saved up but want to get onto the property ladder.
If you don’t feel like you are in a position to afford either your first house or a new home in the current market then our advise would be to get a good saving plan in place!
Disclaimer: As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.