The head of the National Association of Estate Agents is warning there could be a “panic” reaction by sellers, flooding the market with homes in the fear that mortgage restrictions and interest rate rises may reduce buyer numbers.
At the moment it’s no secret that it’s a sellers’ market. The latest NAEA figures show a particularly strong market with 19 per cent of buyers paying more than the asking price in May. The supply of homes for sale has dropped by 27 per cent since this time last year.
However with current speculation of the interest rate rising, there could be more homeowners putting their houses on the market in a panic that house prices may reduce as a result of interest rate and mortgage rate hikes.
The Governor of the BOE Mark Carney stated that rates could rise above 0.5% & that “gradual and limited” increases would be needed to reduce the risks of an overheated housing market. The average first-time buyer is currently borrowing 3.4 times their household income, with some taking out loans at more than five times their salary, according to the Council of Mortgage Lenders.
There has been a gradual rise in the proportion of a property’s cost that people are borrowing to finance a mortgage, but since April banks and building societies have been required to carry out tougher checks.
For those looking to sell their property, it is probably unwise to wait in the hope of getting a higher price for the property. Since the peak house selling season is upon us, now is the time to take advantage of a still strong property market before the position changes.