One question on the tip of homeowners’ lips is: “Will house prices continue to crash or will we see a recovery soon?”
So far it is safe to say property prices have fallen around 8-10% this year, according to the Guardian.co.uk. Most analysts are predicting the same for next year as well and it could easily be 2010 before the economy starts to regain strength. Let’s hope it doesn’t take that long.
Savills Finance is predicting a further 15% fall in 2009 and say that although the market should stabilise by 2010 it may not be until 2012 before we see it “exploding again into another property boom” rising by 20% across the UK. Assuming this happens, will this 20% in 2012 mean house prices will be much higher than right now, if at all?
Below are some typical questions and answers about the current property market.
Q: Will my monthly mortgage payments go up?
A: Due to the current economic climate, uncertainty and lack of confidence among interbank lenders, the base rate is likely to come down therefore, your mortgage rate should as well. Keep in mind, some lenders may not pass on the discount right away so do some research. Reduction of rates will affect those on variable rate and tracker mortgages
Q: What are the interest rate predictions?
A: Experts are assuming at least 1 rate cut before year’s end and we could see the rate drop to 3.5% by this time next year.
Q: Is a fixed rate better than a variable rate?
A: According to a mortgage broker at Savills Finance, a base-rate tracker mortgage is competively priced and with expected rate reductions this could be a good choice. However, one main caveat - if you can’t afford to risk the mortgage rate going up then perhaps a fixed rate is the better, safer option.
Q: What if I can’t sell my house quickly?
A: If you can afford it then maybe touch up parts of the house, paint walls, fix anything broken, or simply lower the price. Consider taking it off the market for now.
Q: As a first time buyer, should I buy now?
A: Keep an eye on the market. You’ll want to buy generally when it’s at the bottom as prices are cheapest. If you don’t have a significant deposit, at least 10% but preferrably closer to 15-20% then keep renting, keep saving, and keep a keen eye on the market.
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