How Will Successful Home Buying Be Affected By Increasing Inflation?
You can't avoid inflation right now, and nowhere is that more evident than in the housing market, where costs for everything from basic necessities to energy are skyrocketing.
You can't avoid inflation right now, and nowhere is that more evident than in the housing market, where costs for everything from basic necessities to energy are skyrocketing.
Undoubtedly, higher interest rates, which are currently at 3% in the UK and growing, tend to accompany rising inflation and can impede the rise in home prices.
In this article, we look at the reasons behind the increase in home mortgage rates and discuss solutions for potential purchasers.
Will inflation drive up or drive down home prices?
Despite the stabilization of the financial markets, this pattern of rising home loan rates and reduced house prices is likely to last far into next year.
Naturally, the affordability of home prices is significantly impacted by a rapid increase in mortgage borrowing costs. When borrowing costs rise, high prices that earlier seemed affordable may soon be significantly reduced. As a result, the growth of the housing market is slowed, and the value of those homes that have become excessively inflated will decline.
Why are mortgage interest rates increasing?
Interest rates tripled as a result of the government's mini-budget in September, and housing organizations reported a decline in sales activity. Major lenders in the nation, including Barclays, Natwest, Halifax, and Virgin Money, cancelled deals before reintroducing them to the market at higher costs.
When other causes including increased borrowing from the pandemic, the supply chain issue, and Russia's conflict in Ukraine were added to the market uncertainties and pound's volatility, interest rates rose.
What is the solution to this?
Both buyers and sellers are having issues with the current inflation. While consumers may need to be more flexible with their purchasing techniques, sellers should concentrate on setting realistic prices to close deals. In order to close a good transaction, purchasers may frequently need to make concessions on the type of property, the price range, or the location.
Expand your horizons
Living within your means is one thing that is of utmost importance. Don't give up if your ideal house in your ideal location is just out of your price range. To get into your new and better ideal home, you might only need to extend your perspective and take into account alternative property types, sizes, styles, and areas.
Re-evaluate your criteria and your priorities. What about looking at a home that would benefit from some "TLC" like a fresh coat of paint or a kitchen and bathroom renovation? What about homes that might not have exactly the number of bedrooms that you would prefer, but have room for an addition?
What about taking into account various areas? Perhaps it's time to check at places around your ideal location or even just outside if you can't find the perfect size of the house you desire there in order to locate something more reasonably priced?