Some home buyers are telling sellers they are not able to pay as much in light of interest rates going up, with some purchasers successfully negotiating significant discounts, mortgage brokers are reporting.
Mortgage borrowing costs are rising, amid speculation that the Bank of England base rate reach as high as 6% next year.
With the cost of home loans rising, many buyers have seen their buying power weaken and they are calling on vendors to be more flexible in terms of price.
Graham Cox, director at SelfEmployedMortgageHub.com, told the press: “I’ve just had a client tell me this morning that they’ve managed to negotiate £13,000 off the asking price of £535,000 on a very nice property in South West London. It’s a buyer’s market now. The pendulum has finally swung.”
The last few days have brought further stress to an already under pressure market that is and has been for a sustained period trying to deal with short notice product withdrawals. At least ten mortgage providers have now withdrawn some or part of their products.
Brian Murphy, head of lending at Mortgage Advice Bureau, commented: “We have seen several high profile and a number of smaller mortgage lender brands withdraw either partially or fully from offering new business mortgage products, and this is likely to be the direction of travel over the next few days. This comes as lenders have been attracting huge swathes of business recently from mortgage holders wanting to mitigate the effects of existing interest rate rises, which has put their operational capacity under already overly stretched levels.
“All of this makes for a period of extreme uncertainty, and for those existing and potential borrowers concerned about being able to access mortgages – be that to buy a home or to refinance an existing arrangement.”
Nick Morrey from Coreco is another mortgage broker to report on home buyers seeking to negotiate on price.
He commented: “We are not hearing about house sales falling through because of their mortgages, but we are hearing of people changing their minds on how much they want to pay.
“More people at the moment who are thinking about putting an offer in are now wondering what their mortgage is going to be. Some are getting a reduction of 5% to 10%.”
Brace yourself for a surge in interest rates, economists suggest
It may be in some areas, but certainly not others where demand remains very high. This why I hate all sweeping statements. 😉
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You’re of course correct about their being local and even micro markets and they all act differently. However, unfortunately and I hate to be the negative Nelly here, but it will impact your area shortly. There’s no area in the UK that will be insulated from this.
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There are 3200+ individual and unique sales markets in the UK, in some areas the market has not yet returned to 2008 levels, in others the market is 20% or more above trend.
Prices are going to be less of a concern than the number of transactions, transaction volume will affect areas that do not see a fall in prices.
He doesn’t come here to post these days but Hillofwad knows first hand the insight I have into the prices, volumes and the agents operating in each of those nests (my word for an economic activity centre supporting 3 or more #local agents). Nest analysis is a far more representative indicator of what’s likely to happen to prices in each of those areas.
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I agree. My response was to the headline – it’s a buyers market NOW.
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Should have increased interest rates sooner and more gradually as well as reducing quantitative easing. Over the long term, the Country would benefit form a steady housing market, like in major European countries which see annual increases of 1-2% etc inline with wage rises – and avoid massive spikes which are in part caused by stimulus such as short sighted stamp duty incentives etc, which are likely to end up with more house price inflation further down the line, which then needs to be dealt with, with abrupt rate rises. It was pretty obvious that something had to change – the UK is, quite simply hooked on cheap money with an underlying economy that’s performing below par compounded with an aged/ageing population. The energy price spike has clearly increased inflation, but underlying structural issues with the economy have been growing over over the past few years. For or against, the fact is the UK left the largest trading bloc in modern history and have found ourselves unable to do a trade deal with the largest single economy on the planet. Tin hats – but we can’t complain its been a good run and we should have substantial pipelines!
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