What you can afford may be more important than the mortgage rate
TPPUK posted on 3rd November 2022
Affordability rather than rising mortgage interest rates should be the focus within the property market, according to The Guild of Property Professionals.
Local estate agents & auctioneers Williams & Goodwin The Property People who also trade as All Wales Auction have been selected as the best independent agents in Gwynedd & Anglesey by The Guild, who state that there is no evidence suggesting a correlation exists between historical interest rates and property transaction volumes.
Interestingly, to support this claim evidence shows there were more mortgages approved when interest rates were at 15% than there were during the boom that has followed the recent pandemic. Then, the monthly repayments would have been higher, but lenders had an appetite to borrow, and people continue to move.
It is claimed that affordability controls the market not the mortgage rates. Rather than focusing on the rate, buyers should be focusing on what they can afford and the cost of the mortgage on a month-to-month basis.
Melfyn Williams, director at Williams & Goodwin commented:
“We believe the current situation where economic factors are pushing up rates should not act as a barrier to property purchases. For someone looking to buy a home to live in, the driving force behind their decision will be whether they want to live in the property for the next five to ten years”.
“Property should always be seen as a medium- to long-term investment, especially when you consider that statistically every homeowner that has kept their property for a ten-year period would have seen an increase in the value of their property.
“So, rather than focusing on rising interest rates, the question should be about whether the buyer can afford to purchase the property now and be able to afford it in the years to come.”
The Guild of Property Professionals CEO – Iain McKenzie highlighted:
“Since 1975, the Bank of England’s base rate had not been below 4% until it dropped to 3.75% and then 3.5% in 2003. Before the financial crisis, interest rates went up to 5.75%, and then were dropped to 0.5% in 2009. While interest rates remained low until the recent hiking phase, the upward trend should be seen as a return to the norm”.
“Inflation is at its highest level for over 30 years and the mechanism the Bank of England uses to try and curb and control it is the interest rate,” he explained. “High inflation causes many economy issues and at a rate of 10%, which is well over the 2% target, it needed to be addressed”.
Melfyn Williams concluded:
“If the Bank of England continues pushing up rates we could get to a point where a 5% mortgage rate is the norm, this only returns us to where we used to be, at the long-term average of interest rates”.
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Williams & Goodwin The Property People are members of the Guild of Property Professionals, National Association of Estate Agents, Association of Residential Lettings Agents, National Association of Valuers and Auctioneers and are Chartered Valuation Surveyors we are members of a National Network of approximately 800 independently owned and operated Estate Agents.
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We have had a 7 month marathon,from putting an offer on a property,to exchange of contracts. We have had pretty poor communication from solicitors,who have made this journey very stressful. The only saving grace has been Gemma, from williams and goodwin. Her support and professionalism has been out...
John Lewis
Williams And Goodwin at Llangefni provided an excellent service throughout the process of selling our property. Caron and her colleagues were very efficient and helpful. Initial valuation was well organised turned out to be very accurate. Enquiries were handled quickly and effectively. Very useful t...
Dean
Highly recommend the team at Holyhead Williams & Goodwin. From beginning to the end. Firstly very prompt in getting a valuation done on the property, Matthew came out very prepared with a folder with all information on previous sales and houses similar currently on market and other factors which...
David Simpson
Very pleased with the service provided by Williams & Goodwin in selling my parents’ house. Everyone was helpful and professional, all along, starting with Matthew at the initial meetings and Jamie throughout viewings, reviews etc. in the later stages Charlotte has been especially dedicated and...
Alison Wakeman
The professionalism of the staff at Williams-Goodwin (Holyhead) in particular Charlotte is absolutely superb. We were in a very sad situation of having to sell my father's bungalow to support his residential care. Although Jamie and Matthew were also involved, initially with the valuation and phot...
