30 Oct 30.10.2017 The advantages of purchasing property at the moment
30.10.2017 The advantages of purchasing property at the moment
With the pound strengthening its position and prospect of house prices and interest rates rising in the near future, the last quarter of 2017 may be the best time to invest in property in the UK.
House prices are falling
House prices in the UK are falling for the first time since 2012. In April, house prices fell by 0.4%, which is the worst monthly decline in nearly five years and in August the annual house price growth in the UK reached its lowest rate in four years. While it may mean hard times for those willing to sell their property, it is an ideal time for those willing to purchase a property to invest in the market.
Despite the political turmoil and uncertainty of the future performance of the UK economy, the fall in Sterling has made purchasing property very attractive to those buying in US dollars. While the pound is strengthening its position, it still remains almost 10% lower than it was on the day of the EU Referendum which enables those buying in US dollars to acquire property at around a 10% discount.
Low mortgage base rates
Since the Bank of England decided to cut its already small 0.5% interest rate to 0.25% in August 2016 the borrowing costs have been the lowest in the bank’s 323-year history. However, these low rates may not last forever. Financial markets now suggest that the Bank of England is thinking of raising borrowing costs for the first time in almost a decade. This would reverse the emergency rate cut introduced in the wake of the Brexit referendum and will result in higher mortgage rates. Accordingly, with fixed-rate mortgage deals being the cheapest they have ever been, this is a perfect time to buy property in order to be able to take advantage of low interest rates and cheap loans, as those on fixed-rate mortgage deals would be protected from any increase until the end of their deal’s fixed term. For example, HSBC offers a five-year fixed rate of 1.79% for those with a deposit of 60% of the property value. The loan carries a fee of £999, lower than many typically tied to such ultra low-rate deals.
Buy-to-let market is booming!
The UK rental markets are booming; over the last ten years levels of homeownership have reversed and the number of people renting privately has doubled. Despite low interest rates, stagnant income and the amount of average deposit rising more than twice has made it extremely difficult for people to buy a home and pushed more people into the rental sector. By 2025, a quarter of all households in the UK will be renting privately. Consequently, rising number of people renting properties across the UK and soaring rents make buy-to-let properties a great investment.