First-time buyers are enjoying a period of increased mortgage application acceptance and low interest rates at present. However, looking forward, market conditions suggest that this could come to an abrupt end in the near future. For this reason, we feel that now represents the best opportunity for people to get their foot on the property ladder.
We’ve laid out the important factors below, to give you insight as to why you should consider getting your mortgage application in as soon as possible, to avoid being left disappointed:
House Prices Stalled Last Month
The average price of property has been increasing steadily year-on-year, with prices up 2.2% from this time in 2017. However, the month-on-month statistics show a change of -0.3% from January to February, according to Nationwide. With property prices expected to continue rising, this stall in growth represents a great opportunity to enter the market and get a good deal on a property:
High Mortgage Approval Rates
First-time buyers are enjoying a period of high mortgage approval rates at the moment, with 74% of applications through a broker being approved in Q4 2017. That’s an incredible 21% increase from the same period the year before!
Data from the Intermediary Mortgage Lender Association (IMLA) suggests that this is due to a number of factors including low interest rates, improved product availability, and competition between mortgage lenders. This has improved access to mortgage finance overall, boosting the hopes of first-time buyers.
Whilst this is excellent news, it’s unlikely that this trend will continue for too much longer, meaning that potential buyers should be quick if they want to capitalise on the increased likelihood of their mortgage application being accepted.
Interest Rate Increase Imminent
The reason that mortgage acceptance rates are likely to stall in the coming months is that the Bank of England have hinted at a possible interest rate increase in May. They also suggest that interest rates are to continue to rise in the future.
The base rate was raised in November last year, from 0.25% to 0.5%, paving the way for further increases in 2018. As interest rates rise, first-time buyers will find their mortgage applications increasingly scrutinised, possibly leading to a decrease in rates of acceptance. Analysts expect the base rate to be at least 1% come the end of 2018, so now represents the best time to apply.
Mortgage Rates Remain Low
Despite the expected base rate increase, interest rates on mortgages currently remain low, with lenders undercutting each other in what remains a highly-competitive market. Due to this, the base-rate hike in November had less of an impact on mortgage rates than expected:
However, further increases would likely see the best deals removed from the market and replaced with costlier alternatives, again suggesting that now is the perfect time to get your foot on the ladder.
If you’re considering purchasing a property, we can help you to find the best deal and give you the greatest possible chance of having your mortgage application accepted. Visit our “Contact Us” page for information on how you can get in touch.
