Put that in the context of a parallel RICS prediction that house prices will increase at a slower rate of just 20% over the same period and securing a favourable mortgage deal at the earliest opportunity makes a lot of sense, according to fresh insight from financial services experts, Choice Finance.
Matthew Pennell, Managing Director of Choice Finance, believes that, with the right advice, thousands of British first-time buyers could set themselves up for a double-win – getting themselves on the property ladder and easing their monthly financial burden.
He said: “For the majority of us in the UK, rent and mortgage payments represent our biggest monthly outgoing. Indeed, many of us spend as much as half of our take-home pay on keeping a roof over our heads, so getting the best possible value from a mortgage deal can have a significant, positive impact on our finances.”
The cost of living isn’t doing anybody any favours at the moment. Inflation is now forecast to be 3% by October. In the main, that’s due to the weakness of Sterling since the Brexit vote but it’s fully 50% higher than the Bank of England’s 2% target – a pinch we’re all feeling at, say, the petrol pump and the supermarket checkout.”
Add that to the projected rise in rental costs for tenants in the years ahead, plus the widespread stagnation of wages, and it seems tenants’ belt-tightening will continue for some time. But it’s not all bad news – only last Thursday, the Bank of England Monetary Policy Committee voted once again to peg interest rates at 0.25%, which means first-time buyers could take advantage of some great fixed rate deals.
A fixed rate deal that fits your circumstances locks in an element of certainty in an uncertain world. Over the course of five years, for example, before the rate expires, you know precisely how much you’re spending on housing, month in, month out. Unfortunately, for renters such predictability is rare.”
Matthew continued: “That said, the base rate has been at an all-time low for a very long time now and most commentators agree a rise is imminent in the next one to five financial quarters. When the inevitable happens, even the best mortgage deals will no longer represent such good value.
So, if you’re looking to take that next step, it’s a good time. But it is really important you get the best possible mortgage deal for your circumstances. A fully qualified, independent mortgage advisor can explain the ins and outs and help you work out the best way forward. And the good ones will stand with you all the way through to completion.”
