Mortgages in March

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The last few weeks have been interesting, there has been a lot of changes going on and I thought it would be good to have a little recap.

Interest Rates

I think it was impossible to start with anything else. The base rate has been on the increase since the beginning of the year due primarily due to inflation. That is showing no signs of slowing down which leads me to think interest rates are only going in one direction.

Interestingly however is that Mortgage rates are not rocketing up. So that leads me to think that maybe the base rate increase may not go up massively over the next 12 months.

The other thing I have noticed with interest rates is that it appears to be affecting the high street more than the specialist lenders. The specialist lenders have been bringing out “limited edition” products, which usually means lower rates and/or reduced fees. Despite the base rate going up, it does not appear to be quite as bad as the papers may make you think.

Property Sales

I think this is in part why rates are not increasing massively. The number of transactions seems relatively low and certainly lower than at more or less any point in the last 2-3 years. Demand seems to be outstripping supply, but that is because the supply of homes is just not there.

Speaking to a few agents, it appears to be that people are getting their homes valued but not putting them on the market as there are no properties out there – which is a bit of a catch 22 scenario. This is turn is causing another problem…

Property prices

Due to the lack of supply, there are more people looking at each property that comes on to the market. This is having the effect that people are having to offer over and above the asking price. Property prices are on the up despite the fact that people have less money spare at the end of each month due to inflation.

Summary

It is a very strange position we are in at the moment. Inflation is high meaning people have less money each month. Despite that, house prices are on the increase, although that only appears to be due to a lack of supply.

Hopefully now spring is here we will start to see more properties coming to market which will (fingers crossed) help to level off house prices. In December I gave a prediction of what I thought would happen with house prices in 2022… My prediction was that we would see a lack of properties on the market (which I suppose was right) but also a lack of demand which would balance everything out and mean property prices remain fairly level.

Part of my prediction was right, but demand is still very high at least comparatively speaking which means house prices are still on the up. I think that means it is safe to say my prediction after only 3 months was wrong.

I will try and do a better job next year.