Bank of England give property buyers positive signals

Bank of England give property buyers positive signals

A month is a long time in the property industry.Back in January the Centre for Business and Economic Research said that house prices will fall in the UK this year. The forecaster said that prices will fall 0.6% in 2015 with London seeing the first marked falls in more than five years. It also said that prices will fall by 3.3% after gains of 16.8% in 2014.

The CBER claimed that the threat of higher interest rates, the uncertainty of the general election in May, greater property supply and fewer foreign buyers will see the market go into reverse this year. But not every economist shares the CEBR’s predictions, with the Royal Institution of Chartered Surveyors predicting 3% growth across the UK, with prices flat in London and banking chain Halifax saying it expects prices to rise by 3-5% in 2015 after the election lull.

Recent falls in oil prices have led to governor of the Bank of England Mark Carney saying that interest rates may be slashed even lower, despite the fact they’ve been at an all-time low for nearly six years. There are concerns that there will be a deflationary spiral, which will lead to wages being pushed down and consumer spending falling. To stop this happening, interest rates could be cut again.

Why you should buy

So, contrary to the advice of some experts, now could be a good time to take the plunge and buy a property. Mortgage rates are at a record level and homeowners can make the most of this and fix for two years at just 1.18% and up to 10 years at less than 3%.

It’s always important to see if the arrangement fees are worth paying as if you don’t have a big mortgage, you may be better with a slightly higher rate and lower fee. Also, if you’re planning to move house soon, remember to get a portable five-year fix so you can take it with you. You will also need to remember that the new Mortgage Market Review (MMR) rules have made it a lot harder for people to get mortgages, as they’ll have to prove they can meet higher interest rates if they were to increase. Borrowers considering a new mortgage should also bear in mind that if things change the low fixed rates on offer may no longer be available when their time is up and even if they did want to change, they may be hit by an early repayment charge.

There’s been a lot of talk about 2015 being the year house prices fall, but it seems as if this may have been a little precipitous. What with the prospect of lower interest rates, the stamp duty changes announced in December’s Autumn Statement, which will save 98% of homebuyers money; along with the super cheap buy-to-let mortgages on the market where lenders are slashing rates and relaxing lending terms; why not make the most of these options as they may not last forever.