The year so far has undoubtedly presented some difficulties for those investors relying on mortgage borrowing. Has this changed the focus for some buyers?<\/b><\/p>\n
Interest rates, mortgages and inflation levels have dominated media headlines for much of 2023 so far. As the Bank of England has tried to curb inflation with a series of interest rate rises<\/a>, lenders reacted by scrapping products and increasing their mortgage rates.<\/p>\n In recent weeks, though, there has been a definite shift in the market, in what has been described as a ‘mortgage war<\/a>‘ due to levels of competition ramping up among lenders. The number of mortgage deals has soared, while certain products have fallen below 5% for the first time in many months.<\/p>\n All of this has certainly affected the decisions being made by some investors – and may have caused a number of would-be first-time investors to adopt a wait-and-see approach until there is more certainty over rates and affordability. However, the current climate is presenting certain opportunities, too.<\/p>\n According to Nick Sheppard, managing director at Framework Mortgaging<\/a>, in a recent interview with BuyAssociation, lenders have reacted to the general uncertainty in the market by taking a step back. This has impacted buyers and housing market activity<\/a>, particularly in the first half of 2023.\u00a0<\/span><\/p>\n “I think the sentiment that lenders have been unsure how to price the mortgages, that\u2019s driven by increased costs of funds and also capacity issues within the lenders,” he pointed out.<\/span><\/p>\n \u201cI feel some lenders have been deterring business so they can kind of see how the ground settles and see where the market goes. The end of the year, I feel, is going to be a little bit more settled, and when we move into next year, we\u2019re going to see some, I feel, quite interesting rates and hopefully better product fees.\u201d<\/span><\/p>\n This optimistic outlook for the months ahead is being echoed by many in the industry, and can be seen in a physical form as lenders are now competing to offer the best rates and products<\/a>. This is despite the expectation of a 25bps interest rate rise from the Bank of England on 21st September.<\/p>\n During times of uncertainty and rate rises in the mortgage market, cash buyers and those who already own property with little to no borrowing are more in the driver’s seat than ever. In many cases, cash buyers can secure property at a lower price as they are less complicated than mortgaged buyers.<\/p>\n Recent research from Octane Capital revealed that cash buyers save an average of \u00a327,600<\/a> on the purchase price, compared with those buying with a mortgage. This is up from \u00a323,600 in 2021, demonstrating the growing power of being able to buy without borrowing.<\/p>\n Alongside this trend, agents have reported a growing interest in the off-plan property investment<\/a> space from many buyers. Not only can investors potentially benefit from not having to secure a mortgage product in the current high-interest rate environment, but it can also be a cheaper way to invest than buying completed property.<\/p>\n As Sheppard pointed out, the lead time when it comes to off-plan investing is much longer, which tends to be a benefit when it comes to capital appreciation – generally, a property will have already increased in value between the date of the off-plan purchase and the date of build completion.<\/p>\n \u201cWith off-plan, completion is two years away, so we need to make sure that clients are mortgageable now, and also we advise clients how to stay mortgageable during the life of that completion time,” he said.<\/span><\/p>\n \u201cObviously, two years is a long time. A year is a long time. Life can happen and things can change. It\u2019s about protecting that client in between reservation and completion.”<\/span><\/p>\n The concept of property investment as a long-term venture<\/a> has not changed, and Sheppard notes that there is still a strong level of appetite in the UK buy-to-let space: “Clients are still interested in buy-to-let. They\u2019re still looking to buy.”<\/p>\n He added: \u201cOff-plan is obviously a safe way to mitigate the high rates at the moment, but I\u2019m seeing a lot of clients still completing on completed stock as well.”<\/p>\n He also noted that investors who remain focused on their long-term capital appreciation rather than short term, and those who focus on particularly strong areas<\/a>, are still seeing opportunities to invest.<\/p>\n \u201cThe remainder of 2023 and going into 2024, I still feel we\u2019re going to see an active market. Rates are going to stabilise and product fees are going to stabilise, so we\u2019re still going to see some strong interest in the buy-to-let world.\u201d<\/p>\n <\/p>\n If you need some professional advice about getting a mortgage, head to our mortgage desk page<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" The year so far has undoubtedly presented some difficulties for those investors relying on mortgage borrowing. Has this changed the focus for some buyers? Interest rates, mortgages and inflation levels have dominated media headlines for much of 2023 so far. As the Bank of England has tried to curb inflation with a series of interest… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":6086419,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[26,2],"tags":[412,107,674],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/posts\/6095411"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/comments?post=6095411"}],"version-history":[{"count":2,"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/posts\/6095411\/revisions"}],"predecessor-version":[{"id":6095451,"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/posts\/6095411\/revisions\/6095451"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/media\/6086419"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/media?parent=6095411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/categories?post=6095411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-au\/wp-json\/wp\/v2\/tags?post=6095411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Lenders unsure on mortgage pricing<\/h4>\n
Cash buyers and off-plan investors on the rise<\/h4>\n
Reactions to rate rises<\/h4>\n