THE TIDE IS HIGH , BUT WE ARE HOLDING ON …
BY CHRISTIAN COVENTRY OF CONCEPT MORTGAGES
“ What do you think I should offer ?” Until recently , when asked this question I would have been confident in providing figures and a negotiation strategy to help get my clients the best price possible on their new home . As the old adage goes , something is only worth what somebody is prepared to pay for it , right ?
By 11:30am on a chilly January Monday morning I had an almost identical conversation with four separate buyers from four different parts of the UK which went something along the lines of “ What is the absolute maximum I can borrow ; how much do you think I should offer over the asking price and do you think I am doing the right thing ?”
It has become almost impossible to pin a figure on these negotiations and I can only run with the advice ; if you really want this property then you should offer what you think its worth and what you can afford . Oh , and be prepared for the fact that your home could drop in value over the next few years . If you can live with that , then go for it ! If not , then walk away .
A bit of a cop out , I know , but this market shows no sign of slowing up and locally what was £ 100,000 last year is now selling for £ 130,000 and what was previously going under offer at £ 750,000 is now achieving close to £ 900,000 . It has only been our clients in London that have managed to purchase under asking price , but even this market has started to turn , with similar feedback from frustrated buyers .
It isn ’ t always plain sailing of course ; the lender must still value the property at the agreed price to provide a mortgage . This has led to an increased number of renegotiations in the latter stages of the process for many buyers when their lender ’ s surveyor has come in short of the desired figure . If a seller digs their heels in
however and a buyer really wants the property and importantly , can stump up the extra cash to make it happen then they will often still go ahead .
These are the largest house price increases of a generation , and this coupled with a current inflation rate of 5.4 % will surely put pressure on the Bank of England to increase interest rates . Raising the bank rate is a fairly blunt tool to calm price rises which will do little to fix supply chain issues and the energy crisis that are reported to be the two largest factors in the current rate of inflation , but those in Threadneedle Street may eventually be left with no other option but to pull the interest rate lever .
The anxiety of this current market has seen the introduction of the forty-year fixed rate ! Yes , you did read that correctly , a forty-year fixed rate .
Rates on these mortgage products are higher than what you would typically pay on a five-year or ten-year fixed rate , but they are currently available up to 95 % of a purchase price .
Products such as these have been the norm in the US for decades , but they are only a recent arrival on these shores in the mainstream mortgage market .
I can only see these products being the right fit for a very small number of buyers , but the fact that they are even available says a lot about the disquietude that currently permeates every part of our society . These products offer long-term stability in an unstable world , a life raft for the stormy seas ahead you might say . As with all tides however , this one will eventually fall .
To contact Concept Mortgages , call 0151 342 3084 .
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