Mortgage Rates - Is The Grass Greener?

In this article, we’re discussing why waiting out the interest rate storm is not necessarily in your best interest when it comes to moving home.

Why Are Interest Rates So High?

It’s often easy to live in the past a rosier time during the last 3 years when interest rates plummeted into all-time lows.

The stark truth is that according to the Bank of England the average interest rate over the last 100 years measures around 8.3%. Right from the start of the 1970s all the way to the year 2000 the Bank of England interest rate didn’t drop below 5%.

It has only been in the last 20 years that interest rates have dropped to the low figures we have become familiar with an average rate of 3.1%.

A number of contributing factors have affected the current interest rate including the war in Ukraine rising energy prices and rapid inflation coupled with the cost-of-living crisis.

 Why Not Wait For The Rate To Fall?

It has recently been well documented that in 1957 interest rates rose rapidly with mortgage rates reaching 7.5%. Those people waiting for a drop in interest rates before putting their homes on the market would have a long wait indeed with rates not falling to their pre-rise levels until 2008.

Ask yourself this question – would you be happy to wait out this particular rate rise storm in your current house for 51 years?

Those waiting in the wings to make that bold purchase may stand to lose more than time moving forward. Waiting for a ‘blue sky day’ in which to purchase could mean decades of waiting until rates drop again. During which time if history repeats itself the value of homes could quadruple (as they did from 1971 to 1993) – leaving those in rented accommodation losing out.

The lesson to take from history is a simple one; don’t wait to buy your dream home as you could be waiting a long time. Date the rate but marry the home! Sometimes there are corrections along the way but buying with a longer-term view almost always sees an increase in the value of property.

Seasonal Downturn Or Market Trend?

Despite fewer buyers in the market according to Zoopla figures sales are actually 15% higher than this time last year whilst Rightmove reported the average asking price for October 2023 was up 0.5% on the previous month.

Meanwhile industry experts have noted trends over the last 15 years reflecting a seasonal slow in the market during this period of November and December as opposed to a market trend dip.

New Year, Fresh Start

In recent years Rightmove has recorded record numbers of sellers coming to the market with home-hunters putting ‘new home’ right at the top of their Christmas lists.

So while the market appears to be slow at first glance remember that in winter it’s a natural trend in both nature and the housing market for things to quieten down.

With January on the horizon a new year beckons and with it the promise of fresh starts and new resolutions. The 2023 housing market has turned out to be more resilient than many predicted since the mini budget of Autumn 2022. Since this time the market slowed to a more ‘normal’ pace post ‘Covid Era’ however there are now signs of stabilisation within the housing market with mortgage rates falling for the last 19 consecutive weeks.

Now take the festive season to rest reflect and refresh repair those loose gutters and get ready to move in 2024 – remember date the rate and marry the home!

For honest advice on what’s happening in the current market in your area be sure to call us on 01204 773 556 or drop by the office for a cup of tea or coffee and a no pressure chat.


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