Interest rates are going up, why now may be the perfect time to buy

Recently the Bank of England increased its base rate from a historic low of .25% to .5%, the first increase in 10 years.  While the move was not unexpected, it does put in motion the first step in what will likely be a series of future interest rate rises. 

For prospective buyers this will likely mean that mortgage payments will increase and for those with fixed rate mortgages that are expiring, remortgages will likely be higher. While this may mean that a new home purchase may be more costly than it was last month, rates are still historically low and the BOE’s rate of .5% was where the rate sat for seven years before 2016.

Given the unpredictability of the UK economy and Brexit negotiations, the common thought for buyers is to take a wait and see approach.  Property prices throughout London have declined in 2017 (in some cases price reductions of 20 – 30% have occurred on specific listings). Many of our potential buyers have said they don’t want to purchase a property that may go down in value.  While this is certainly understandable, for those buyers looking to get on the property ladder or investors looking to build their portfolio, it’s important to recognize this also as a window of opportunity. Every buyer’s situation is unique and no one should buy more home than they can afford, but London property prices will eventually recover, while interest rates are likely on an upward trend.  For foreign buyers, the weakened pound presents additional savings.

No one can time the property market and for those waiting for the bottom before jumping in, you’ll only know it’s the bottom when the market is on the way back up. It’s important to cut through the noise and the headlines and consider all the factors. Whether you are currently renting or an overseas buyer with a child in UK boarding school or university, owning a home in London makes practical sense that goes beyond pure numbers. 

Many investors have built their real estate empires in times of uncertainty.  With the right due diligence and understanding  of the London property market (along with the different sub-markets with London), now may be the perfect time to buy. 

Please get in touch if you’d like to consider all your options and plan the best strategy for purchasing in London.