We can only hope that the rates are not as expected.1) On site auction– I call this the “Old Fashioned Way” ! We come to your place and have the auction right on site. The cost of repossessing properties will be far higher for the banks than if they cap interest at, say, 4.5% and pay the remaining 1.5% themselves. He concluded that “Realistically, banks will eventually need to provide some relief in order to prevent a major number of foreclosures. They might have to leave the market if the interest rate makes it unaffordable.” He went on to say “One thing that worries me is people who obtained a mortgage with an artificially low interest rate and a set term of 2 to 5 years, which will expire in the upcoming years. The number of first-time buyers entering the market will undoubtedly slow down as mortgage offers fall through and affordability levels temporarily put an end to many people’s dreams of becoming homeowners.” Mr McArdle told us “The news is really upsetting and distressing for many people. We spoke to Karl McArdle, the Co-CEO of The Property Buying Company about what he thinks this will mean for the open market. This is then set at 10% on homes worth between £425,001 and £625,000. The good news for first time buyers is that the mini budget included a total cut in Stamp Duty Tax on any house worth less than £425,000.
Would-be buyers are already dealing with a cost-of-living crisis and rising rents meaning that they have less money for disposable income. Not only has the number of searches fallen, but the amount borrowed has also decreased, going from 74% loan-to-value to 72%, making the deposit requirement even higher. Their data shows that the number has slipped from 10,305 in August to 9,765 in September. The number of searches by first time buyers for mortgages has already begun to fall according to data from mortgage technology company Twenty7Tec. The Bank of England base rate forecasts climbed as high as 6% last week, up from the current 2.25%. On top of this, interest rises paired with rising mortgage repayments spells trouble for those who wish to upsize or move to another house. The homeownership dream has become a lot harder for first time buyers to achieve as high loan-to-value mortgages will be less readily available. But we will re-evaluate as the picture becomes clearer.” Currently it looks as though the mini-Budget will push interest rates even higher. The head of residential research at Knight Frank has said “Over the summer we were already anticipating rising interest rates to deal with global inflation caused by rising fuel costs and the war in Ukraine. In the 12 days since the announcement, experts are still unable to predict exactly how high interest rates could climb. The mini budget itself has been described as both “inflammatory” and “reckless” by property analysts. This drop in prices has come after the Chancellors ‘mini-budget’ which sent the mortgage market into a downward spiral as well as causing the pound to drop in value.Ī ‘year of pain’ is being predicted for first time buyers and mortgage holders as plummeting sales and sliding prices brought on by high interest rates, tighter lending and a cost-of-living crisis set in.Įstate agents Knight Frank have published forecasts today that predict that the average house price in London will fall by 10% over the next two years meaning that values will go back to where they were at the beginning of 2021.Īs a result of the mini-budget, mortgage products have been pulled off the shelves and are currently being repriced, which is adding to the chaos that is already consuming the market. Over the next two years, house prices in London are predicted to fall by 10%.
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