In this market update, we delve into the current state of the residential housing market, exploring the latest trends in house prices, interest rates, and inflation. Additionally, we debunk common myths and shed light on various income sources and mortgage options. Let’s dive in!
In April, the residential housing market experienced a slight increase in house prices. The average asking price for homes in Great Britain rose by 0.2% to reach £366,247. This upward trajectory demonstrates that house prices continue to hold steady with no immediate signs of decline.
Mortgage lenders have been actively reducing mortgage rates, providing an opportune environment for homebuyers. Currently, the best 2-year fixed-rate mortgage stands at 4.08%, while the best 5-year fixed-rate mortgage is available at 3.79%. These rates are subject to a Loan-to-Value ratio of 60%, enabling borrowers to secure favorable financing options.
After peaking at 11.1% in October 2022, the inflation rate has shown signs of easing. The current inflation rate sits at 8.7%, reflecting a downward trend. Analysts maintain confidence that the rate will further decline and reach approximately 4% by the end of the year.
DID YOU KNOW?
- a) Myth-busting: 10% Deposit Requirement:
Contrary to popular belief, aspiring homeowners are not necessarily required to provide a 10% deposit to purchase a house. Many lenders now offer 5% deposit deals, providing individuals with more attainable options to make their move into homeownership.
- b) Diverse Income Sources for Mortgages:
When it comes to securing a mortgage, individuals can utilize various income sources beyond traditional employment. Lenders now consider income from Universal Credit, Child Maintenance, Buy to Let Rental, Foster Care, and many other sources. This flexibility widens the scope of eligibility for mortgage applicants.
- c) Self-Employed? One-Year Accounts Accepted:
While most lenders typically require self-employed individuals to submit two years’ worth of accounts, it’s worth noting that some lenders are now open to assessing just one year of submitted accounts. This more accommodating approach offers greater opportunities for self-employed borrowers to access mortgage financing.
The residential housing market is witnessing a steady increase in house prices while enjoying the benefit of falling interest rates. Inflation, though gradually declining, continues to be a key factor to monitor. Debunking common myths, we emphasize that a 10% deposit is not a mandatory requirement, and various income sources can be considered for mortgage eligibility. Self-employed individuals can also find lenders who assess only one year of submitted accounts. As the market evolves, staying informed about these trends and options will empower prospective homeowners and investors alike.
The data provided in this blog post is based on available information as of 26/05/23. Market conditions can change rapidly, and it is advised to consult with a financial professional for the most up-to-date and personalised advice.
