The Bright Side of Rising Rates: Why UK Property Owners and Buyers Still Have Much to Celebrate

UK mortgage rates have started to rise in recent months, and it’s not surprising if this has caused some concern. However, this could actually be a source of comfort, as rising mortgage rates could help buyers and vendors in the long run and bring balance back to a market that was disrupted in 2020.

Mortgage rates in the UK still remain near historic lows, despite the skyrocketing rate increase in 2022 to keep up with widespread inflation. For homeowners and buyers, the recent minor rate increases should not fill you with dread, because the market continues to present plenty of opportunities. Therefore, if you’re considering buying a property now, or looking for cost-savings on your investment property, the market could be on your side.

Rightmove reported that the average UK 2-year fixed-term mortgage rate (for a 95% Loan to Value (LTV)) is at 6.50%, as of 4th July 2023, which has experienced a recent dip from the rates of 6.62% recorded on 27th June 2023. Rates vary slightly based on LTV and fixed-rate terms. Therefore, buyers can still lock in a budget-friendly mortgage and maximise their purchasing power.

Trading Economics reports that the number of approvals for house purchases – used to indicate future borrowing trends – increased in May 2023 and exceeded predictions. This indicates that many buyers are still able to take advantage of sums offered by lenders, despite the Bank of England’s policy tightening.

For sellers, modest rate rises could still mean that your property’s value could improve, and thus you could secure a good price and have more capital to invest in your next purchase. A typical property in the UK now costs £285,932, according to Halifax.
The Bank of England has predicted that inflation will fall quite quickly in 2023 and reach 5% by the end of the year, and will soon reach its target of 2% afterwards. This can be attributed to wholesale energy prices falling, and this will be reflected in the property market as well as the ongoing cost-of-living squeeze many are feeling. Therefore, it’s reassuring to know that funding the lifestyle we all want isn’t out of the realm of possibility.

While it’s easy to feel uncertain at first glimpses of a price rise, the statistics show that the UK property market is still in a strong position. Modest mortgage rate rises do not change the bigger picture of high demand and a market poised for continual growth.

Therefore, both buyers and sellers in the UK property market can remain confident that the sector is very stable and the outlook remains very bright.

The Bright Side of Rising Rates: Why UK Property Owners and Buyers Still Have Much to Celebrate

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