Money Matters: Why not now?

Could waiting to buy could actually cost you more? Despite Bank of England base rates rising to 4%, many are still waiting for the cheaper fixed mortgage rates to materialise. Our experts at Capital Private Finance dive into the different approaches to financing your dream property.

Who are CPF?
Our dedicated mortgage specialists take a deep dive into the current mortgage market to help you understand more about what’s going on.

You may have heard that fixed mortgage rates may actually come down over the coming weeks and months even though Bank of England base rates have now risen to 4%, and may continue to rise a little more. This has meant that some potential homebuyers are putting things on hold; waiting for cheaper fixed rates to materialise.

Although some 5 year fixed rate products have now just crept under 4%, this may reduce further by up to another 0.5% over the next couple of months as a price war develops between major high street lenders. However, it is unlikely that rates will return to the 1% or 2% levels that we have grown used to. This reduction in fixed rate products is further fuelled by the ‘Swap Interest Rate’ market (SWAPS).

The ‘Swap Interest Rate’ market

SWAPS try to predict the future when it comes to interest rates, and for some time they had been predicting that Bank of England would be increasing rates significantly over the coming year – potentially as high as 6 or 7%. Lenders had been creating fixed rate mortgage products based on these predictions, and that is why fixed rates have been so much higher than the actual Bank of England rate.

Since the ‘mini budget’ turmoil in September last year, the market has calmed, and the predictions for future interest rates, or SWAPS, have been coming down, which is the reason we’re seeing fixed rates being reduced despite Bank of England rates potentially continuing in an upward trajectory (just not nearly as high as was previously anticipated).

Will rising interest rates mean lower house prices?

It’s difficult to tell. The increase in house prices very much depends upon the supply and demand of property. With the supply of available property so low – and properties in short supply, the increased buyer demand ensures prices remain high. If, however, household finances are continually squeezed then experts do suggest that house prices will have slowed down by the end of the year.

Speak to our experts and find out

What does this mean for your property value? Get in touch with one of our property experts to find out.

So, is now a good time to buy?
Yes it could be, is the answer – because of tracker rate mortgages. As the name suggests, they track the Bank of England base rate, which means that they can actually be cheaper right now than fixed rates. Although, the risk is that these rates could go up, along with the Bank of England rate, making it cheaper for a limited time only. However, there is growing sentiment that the Bank of England may start to lower interest rates before the year end – which could mean if you are prepared to brave a few months where your rate may be slightly higher than the best available fixed product, you may be ‘quids in’ as rates start to come down again.

Capital Private Finance

If you would like to find out more about tracker rate mortgages and whether this is a suitable option for you, book a no obligation appointment below.

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