Mortgage advice in a volatile property market

Property values have seen their biggest fall in 14 years. According to lender Halifax house prices fell 2.3% to November 2022. This means house prices have fallen for a consecutive three months and this is affecting confidence in the housing market and is a genuine concern for anyone looking to buy or sell property in 2023. However, it also presents opportunities for first time buyers and home movers seeking a ‘good buy’.

Moving home in a volatile market

It may seem counter intuitive, but if you are considering moving home during the market volatility, there are opportunities out there to take advantage of. 

Errol Hall, Mortgage Broker in Cricklewood, North London and Tracy Dove, Financial Consultant and Mortgage Broker in Basilon, Essex shed light on the current state of the market and provide an overview of what to do if you are in a position to move now or in 2023.

Errol Hall, Mortgage Broker in North London said:

‘Although the endless barrage of negative news will put some home movers off, people still need and want to move. Additionally, those on low mortgage deals that are ending soon will need to remortgage at the current most cost-effective rates. It is important to seek advice and also search out the opportunities in a difficult market. Right now, making the most of your money has never been so important and seeking expert advice is recommended.’

What is happening to the housing market?

The property market is being affected by the economic uncertainty that we are currently experiencing with inflation running at record levels and the rising cost of living putting pressure on a family’s budget. According to Halifax Mortgages the year-on-year growth in property prices has fallen from 8.2% to 4.7%. Although the market was expecting a slowdown following recent house price growth and the economic shocks in the Autumn, the market has been particularly volatile, and this fall is worse than anything we have experienced in recent years. However, it is important to put the fall in property values into context as according to Halifax property. House prices went up £12,000 this year compared to the same period last year, and they are now £46,403 higher than when the pandemic started in March 2020.  

How does the recent fall in property values impact the mortgage market?

Such a sudden fall in house prices is worrying for anyone buying or selling their property and it has happened after a series of economic shocks in the UK. Many people looking to move house are also having to face increased energy, food and mortgage costs and the increased cost of living is also adversely affecting the housing market.  

Mortgage Rates stabilise but remain high

Everyone on a standard variable rate has seen their mortgage rate increase since the summer because of the economic situation and the sharp rise in interest rates since September. Anyone coming off a fixed rate mortgage is now having to pay substantially larger mortgage costs. The Office for Budget Responsibility has forecast that housing activity will slow until 2025 and mortgage rates will stay around 5% for the next five years, they also forecast it won’t be possible for anyone to borrow at the low rates we have been used to. According to their forecasts homeowners average loan rates will continue to rise and could peak in the second half of 2024.  

Stamp Duty to reduce in 2025

In the September mini-budget chancellor Kwasi Kwarteng announced that the 2% stamp duty would reduce to 0% for anyone purchasing property valued between £125,000 - £250,000. This was beneficial for first time buyers who were trying to get on the housing ladder. In November new chancellor Jeremy Hunt confirmed that this stamp duty cut would be kept but only until March 2025. First time buyers will also not pay stamp duty on the first £425,000 of a new home, increased from £300,000.

What should you do if you want to move house?

Tracy Dove, Financial Consultant and Mortgage Broker in Laindon & Basildon, Essex and Exeter, Devon said: 

‘We are seeing first-hand how the fall in property values and the economic uncertainty is hitting confidence in the housing market. Some people are pulling out of chains because of the uncertainty, or they are waiting to see what happens to house prices and their living costs before acting. It is very difficult situation for everyone, especially first-time buyers because if they find a property, they want to purchase there is always a concern their vendors may decide to pull their property and not go ahead with the sale.  

Buyers also have no guarantee that the mortgage deal they originally see will be available when they complete, and they don’t know what their mortgage costs are likely to be so find it difficult to budget.  

Although mortgage rates have stabilised mortgage costs are so much higher than we have been used to and anyone looking to move house must use a greater proportion of their income to pay their mortgage, when they are struggling to pay their energy costs and other household bills. We recommend that if you want to move house you call the Thomas Oliver mortgage broking team in advance. We can discuss the housing market with you and the issues our clients are facing. We can help you budget, and we will review all lenders products and rates, so you find the best mortgage deal for your circumstances.’  

In Summary

Don’t be put off by the volatile housing market. There are opportunities out there for first time buyers, especially with the reductions in stamp duty and likelihood that mortgage rates will stay high beyond the end of the stamp duty cut in March 2025. If you want advice from a local mortgage broker call Thomas Oliver mortgage brokers on 01707 872000. 

For more information read:

• Is turbulence in the housing market an opportunity for first time buyers
• Interest rate rises by 0.75% - Are you worried about the increase?
• Equity release advice

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.