Five Things All Property Buyers in the UK Need to Know

Whether you are seeking a profitable investment opportunity or simply looking for a home to live in, the latest figures from the Bank of England make for interesting reading.

With BoE base rates having been increased to 1% (and with further hikes on the cards), there are five things all property buyers in the UK need to be aware of right now:

  • Interest rates are rising

Recent bank of England base rate increases represent part of a slow but steady trend of escalating borrowing costs. The recent increase to 1% immediately had a knock-on effect on mortgage rates, and market watchers expect to see more of the same over the coming weeks and months. 

In a nutshell, mortgage borrowing is unlikely to get any more affordable than it is right now. Hence, those planning to make their moves are being advised to do so as promptly as possible. 

  • Remortgaging is surging

Faced with the prospect of further interest rate hikes, there has been a major spike in activity on the remortgage market. Around 17,700 new remortgage deals were agreed in February – a huge increase from the 10,230 recorded in the same month last year.

“Mortgage offers typically valid for six months, so if you are considering refinancing your home, it’s better to act sooner rather than later,” advises Knight Frank Finance partner, Hina Bhudia.

  • Rents are at record highs

It has never been more expensive to rent privately in the UK, and average monthly rents are surging at their fastest ever rate. Average asking prices in London were up 14% in April year on year, whereas the national average came out at 10% compared to the same month in 2021.

“On top of the obvious benefits this will bring landlords with properties in the city, it could also be a great opportunity for them to raise capital against their existing properties to improve and grow their portfolio,” said Huy Le, landlord finance specialist at Knight Frank Finance.

“For buy-to-let mortgages, lenders use the rental calculation for a property to determine how much you can borrow, so landlords could take advantage of rising rents levels to maximise their borrowing power.”

  • Help to Buy is coming to an end

It is now less than 12 months until the withdrawal of the government’s Help to Buy scheme, which is already resulting in frenzied competition for the few eligible properties that are still available.

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Buyers interested in taking advantage of the Help to Buy are therefore being advised to act fast, ideally with the help and support of an experienced broker.

  • The equity release market is expanding

Millions of homeowners across the UK are benefiting from sudden and massive increases in the value of their homes. This is prompting more households than ever before to consider equity release (partial or total), tapping into the equity they have tied up in their properties.

Average house prices increased an astonishing £27,000 over the past 12 months alone, spurring an increase in equity release borrowing to hit a new quarterly high of £1.53 billion in Q1 this year.