Recent data suggest there is some good news for property investors: mortgage affordability has seen an improvement since summer, making it more feasible for potential homeowners.
According to research by the specialist property lending experts at Octane Capital, there has been a marked increase in mortgage affordability since this summer. This means that individuals who took the plunge and bought property in September might have seen their average repayment drop by £64 per month compared to those who purchased in July.
Significant Cost Reductions in Mortgage Repayments
Digging deeper into the numbers, the average cost of a 75% loan-to-value (LTV) 5-year fixed rate fell to 5.30% in September, down from 5.79% in July. The implications of these new developments are worth exploring. Potential home-buyers can now enjoy a price reduction of £64 per month compared to a few months prior when they make a full mortgage repayment. This difference equates to a significant saving of £765 over a year.
Mortgage Rates: Decreasing Despite Predictions
The recent decrease in mortgage rates comes as a surprise for many, given the landscape of the property market just a few months ago. Jonathan Samuels, the chief executive of Octane Capital, expresses his view on why the current trend should be seen as encouraging news.
As he points out, “After reaching scary highs, and much industry discourse suggesting they would remain that way for a long time, mortgage rates have started to fall over the past three months.” This downward trend is promising news for those coming to the end of a fixed term, as they can look forward to reduced pressure on their household finances.
A More Affordable Housing Market for Buyers
From a buyer’s perspective, a drop in mortgage rates means properties are becoming more affordable—an added bonus for the upcoming autumn rush on the housing market. The fact that borrowing is cheaper should also stimulate buyer demand in a market where many have postponed their property searches due to fears of mortgage costs spiralling out of control.
Implications for Sellers: Increased Buyer Demand
Equally crucial is the impact this will have on sellers. The fall in mortgage costs should spur increased demand from buyers, bringing a positive shift to the currently apprehensive market.
Looking forward, Jonathan Samuels expresses confidence about the ongoing trend, barring external disastrous events or escalated governmental issues. “We’re confident that, barring any major disasters or further governmental calamities, rates will continue to drop, albeit slowly, between now and the start of the new year.”