Is it time to buy a home?

Is it time to buy a home?

Off By Ed Hanna

In a landscape marked by escalating mortgage interest rates and the relentless squeeze on the cost of living, potential buyers have been hesitant to make property purchases over the last year. So, is this a wise strategy, or could turbulent times present an opportunity to take the plunge? 

By Fiona McCann

Here, we discuss if it’s time to purchase a home.

While Serving personnel can enjoy the benefits of heavily subsidised accommodation or new provisions through the Future Accommodation Offer, on Service termination this ends, prompting the pivotal question: do you opt to rent, or buy? If you choose to buy, timing becomes important and will require planning. If you’re purchasing long before your departure date, this might entail unattractive mortgage rates, accompanied by commuting issues, or additional accommodation costs to live in the block/mess, on top of your monthly mortgage payments. Then again, you may gain from lower property prices. Or, if you wait it out and save hard while in your Military accommodation and buy when you leave, house prices may have risen again, though you might gain from lower mortgage product rates, therefore reducing monthly payments.

Proof of employment
Be ready to produce at least your last six months of payslips to the mortgage lender, proving continued stable employed income from the same employer. It’s best to start strategising your post-Military living arrangements a year or more in advance.

Buyers’ market?
With the Bank of England consecutively hiking interest rates 14 times from 0.1% in December 2021 to 5.25% in August 2023, the cost of living and rises in mortgage rates have shifted house prices into a state of limbo – so could they go lower? Higher mortgage rates have made borrowing more expensive, therefore fewer buyers can afford a mortgage, in turn, creating a reluctant ‘buyers’ market’, and leverage to drive a hard bargain in negotiating lower purchase prices. 

Market fluctuations 
As of January 2024, higher mortgage rates have cooled demand across much of England, with house prices in the East of England falling by 2.7% followed by the South East by 2.4%. In contrast, in Scotland and Northern Ireland, house prices have increased. Forecasts from the Office for Budget Responsibility suggest house prices will start to rise again in 2025.

Super-low interest rates are a thing of the past
Realistically, interest rates should hover at least around 4%. I would therefore presume that the days of almost non-existent interest rates are long gone.

Future challenges
The Financial Conduct Authority anticipates that 1.5 million homeowners will see their old favourable mortgage product rates end in 2024. These homeowners will transition onto the higher rate products we see today. This may compel some homeowners to sell, injecting more properties into the market, further fuelling a buyers’ market.

Ultimately, your decision to buy hinges on a variety of factors. Whether it’s timing, or assessing your post-Military scenario, a strategic approach can be instrumental in making the right decision for you.

About Fiona McCann
Fiona McCann Served with RLC as a Driver, touring Northern Ireland multiple times, Canada and Cyprus. She left to pursue a career in the property sector, surveying homes for mortgage lenders, and is currently studying to become a lawyer.