House prices may have risen beyond expectation in recent years but, interestingly, affordability is at a new high too! These factors might seem diametrically opposed, yet the opposite is actually true. Could this be why buyers are still keen to take the plunge despite the political and economic uncertainties we are currently experiencing?
Affordability, or the relationship between earnings and the cost of housing, is growing at its fastest rate since 2011. So buying a home is actually more affordable than it was ten years ago, despite the average house price having risen by nearly 48% since then.
According to mortgage broker Private Finance, the average borrower is saving £104 per month on what they would be paying in 2008, when mortgage interest rates were based on a Bank of England base rate of 5%pa.
Once the deposit and SDLT is paid, the actual monthly repayments (against which affordability is calculated) are broadly in line with the levels seen 20 years ago.
So, effectively, today’s homeowners are better off than the people from whom they bought their property! Let’s just hope that interest rates remain low (and all indications suggest that they will for the foreseeable future).
So, if you’re wondering whether to move now or wait, it’s worth considering what others are doing - buying now and locking into one of the many long-term low fixed-rate mortgage deals on offer. And whilst we cannot offer formal mortgage advice, we can help you decide on the right property for your needs. It’s what we do.