Are you wondering whether you should wait for interest rates to fall further before buying a home? If so, you’re not alone. Darren Polson helps a reader with a big moving decision…
The Question
My wife and I are planning to buy a home. We sold our last property as we needed to relocate to the south of England, and we have been renting whilst we decide what to do. We are still undecided, as we have now heard stories interest rates my fall as low as 2.75% by the end of the year.
If we wait till then, we fear property prices might increase and this would be a double blow if there was no change to interest rates. But, equally, would we kick ourselves if we move now and rates plummet. What should we do?
Darren’s Answer
I can understand why you are asking, and this may be a difficult decision. Properties will fluctuate and prices are moving upwards, but this is dependent on location and property type.
Predicting rates is difficult given the number of economic factors that can impact rates. Banks are not dependent on the Bank of England (BoE) Base Rate as they will use swap rates when looking at mortgage lending.
However, reductions do give lenders confidence. Many of them have already factored in rates decreasing and this was evident with many lenders reducing rates throughout April.
Optimism has increased slightly with predictions of further BoE base rate drops after the most recent one on 8 May.
The bigger question now is how this all plays out. Will we get another cut in August and/or November? Will it be two or three cuts this year? Time will tell…
The simple truth is, if it’s the right home for you then it’s the right time!
Given your current situation as renters, you may find that the cost of your rent is higher than a mortgage payment, which may mean that it will save you money to move and begin paying your own mortgage.
I would advise speaking to a broker who can check rates and deals based on your circumstances. This will really help you to make a more informed decision.
A broker can give you an idea of what you can borrow, and this will give you confidence to begin your property search.
Meet our expert…
Darren Polson is head of mortgage operations at Aberdein Considine. He has been writing a regular column for What Mortgage for over two years and is now here to answer YOUR questions.
If you have a question for Darren please email kate.saines@emap.com or leave a message in the comments below.
