Now could be a great time to buy a home in the UK, as market conditions give buyers several reasons to act now – especially as we approach Brexit.
A whole host of factors mean that the market has moved in favour of buyers, including the largest seasonal drop in house prices since 2012, which Rightmove reported as an ‘early Christmas gift’ for those looking to buy. Uncertainty is keeping mortgage rates down, while interest rates remain low since the Bank of England raised the base rate from 0.5 to 0.75 per cent in the summer.
But with the UK set to exit from the European Union, is now a good or bad time to buy a house?
The answer is that homebuyers could well be better off buying now, rather than after Brexit. This is because UK mortgage interest rates are set to rise and house prices after Brexit are unpredictable. Martin Lewis, founder of consumer finance website, Money Saving Expert, suggested: “You won’t save that much on waiting but there is a risk of them going up.”
On the topic of the effects of Brexit on mortgages, Lewis explained that as financial markets rise and fall based on perception and confidence, any event as significant as Brexit is likely to have an impact. Since the amount we pay on our mortgage is linked to the interest rates set by the Bank of England, they would also be affected.
This means that if there is no deal struck with the EU regarding the terms of the UK’s exit from the union, this is likely to cause uncertainty and the markets could drop. If the markets drop, the value of the pound will decrease against other global currencies, and it will become more expensive to import goods from abroad. The Bank of England will then need to strengthen the pound by imposing a rise in the rate of interest – meaning higher repayments on mortgages.
Lewis added that “things are more likely to be smoother” if the UK does manage to garner a deal with the EU.
So while there are big questions marks around house prices after Brexit, it looks like today’s conditions are favourable for buyers. As Lewis explained: “If you are looking to get a mortgage now, rates are cheap…it is a good time to get a mortgage.”