What you can afford may be more important than the mortgage rate

Melfyn Williams

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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Matthew Fox
A great estate agent that go the extra mile to make sure our sale went through with no fuss or delays.
Anne Grossett
Always polite and professional, helped with questions queries, great friendly service, would recommend
Christopher McNaught
Amazing service from start to finish. Everything was fast and efficient from the offset, our house was sold within 72 hours of going on the market. Would definitely recommend Williams & Goodwin for anyone thinking of selling their home.
David Creen
Very happy with the service they provide.
Chris Moore
Everyone I dealt with was extremely helpful, polite and cheery. Nothing was too much for them and they carried out any requests that were needed. Fantastic team.
KDP
I was recommended by a neighbour who had sold their house through Williams & Goodwin, after they’d used a previous local agent with whom they had little interest after one year. With W & G, their house was sold within a few weeks. The service was excellent and the staff very friendly and k...
Chris Squires
Dealt promptly and efficiently with each stage of the sale. Gemma (at the Llangefni office) was outstanding, an asset to the company.
Kyle Williams
Great company, quick service and all staff were excellent during the sale of our house.
Elin jones
Diolch i bawb yn Williams a Goodwin am eich gwasanaeth ac ymdrech i werthu ein ty! A diolch i Gemma yn arbennig am ymateb i phob ebost a galwad yn brydlon a cadw ni ben ffordd. Diolch!
Scott D
During the purchase of our property. We dealt with the Holyhead branch. From our first viewings (not just the property we bought), they were very professional and dealt with all our enquiries fast and efficiently. Unfortunately, part way through our purchase, the sellers of the property we were purc...
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