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Should homebuyers rush to make good use of low interest rates?

Andrea Wulff

Home owners have seen the average value of their UK homes increase by over 40% and almost £60,000 over the past eight years since interest rates hit historic lows.

The UK will soon be approaching a decade since the economic turndown that caused worldwide interest rates to fall. It has left many wondering if there is a rush to make use of low interest rates…

How to make the most use of low interest rates?

Inflation has increased over the last few months and the gap between price and wage inflation continues to grow. These two factors are not encouraging signs for the UK property market. However, record low interest rates are being reflected in the mortgage market as it becomes highly competitive, meaning that homebuyers feel the need to re-mortgage more than ever, in order to make full use of low interest rates as a means of extending their financial reach.

According to research by the Bank of England, average property prices are currently up 41.2% since the Bank of England lowered the rates to 0.5% in March 2009. Interest rates were then lowered again to 0.25% in August 2016. In an analysis of100 towns and cities it shows that home owners in the South East have benefited the most, as they noted seven of the 10 biggest property price rises since March 2009 in the region.

Mortgage regulations

In 2008 an array of mortgage regulations were introduced by UK Authorities in a bid to better police the markets and due to the competitiveness of mortgage companies they have tried to challenge these regulations as competition grows.

Currently, due to uncertainty from ongoing Brexit negotiations, housing stock for sale has fallen further than buyer interest.

To conclude, even though the UK base and mortgage rates are at historic lows there is little likelihood of significant increase in rates in the short to medium term. Property Forum states that: ‘The UK economy has been one of the strongest in the world in recent times, as has the property market, but the uncertainty that lingers across the UK at the moment, should not be one to warrant the Bank of England raising the interest rate.’