The Last Day of ‘Help
to Buy’ and Higher Mortgage Rates: What You Need to Know As House Prices Fall
Again
Last week, the Bank
of England announced an interest rate hike of 0.25%, which will have a
significant impact on the UK property market. The change will impact mortgages,
remortgages, and first-time buyers, and it comes just in time for the last day
of the Help to Buy scheme.
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Money Tips Podcast
guest, Miriam Nawagamuwa CeMAP, Mortgage and Protection Advisor with Larkin
Financial Services Ltd gives her expert views on the mortgage market.
Fixed-rate
mortgages will remain unaffected by the interest rate hike, which is good news
for those who have locked in their mortgage rates for a fixed period. However,
for those who are looking to remortgage, this could mean an increase in monthly
payments.
The Bank of
England's interest rate hike is a response to rising inflation, which has been fuelled
by increasing energy costs and supply chain disruptions caused by the pandemic.
The aim is to curb inflation and stabilize the economy, but the move could also
affect property prices.
The Nationwide just
announced the largest fall in house prices since 2009 and said that prices were
down 3.1% on March 2022.
Higher interest
rates mean that mortgages will become more expensive, which could lead to a
decrease in demand for properties. This could result in a slowdown in the
property market, as potential buyers may become more cautious about making big
financial decisions.
The end of the Help
to Buy scheme is also significant for first-time buyers. The scheme has helped
many people get onto the property ladder by offering government-backed equity
loans. From the 1st of April 2023, the scheme will come to an end, which means
that first-time buyers may find it harder to get on the property ladder.
One alternative
option for first-time buyers is the Lifetime ISA, which is a tax-free savings
account that can be used to buy a first home or used after age 60 for
retirement. The account allows savers to put away up to £4,000 per year, and
the government will top up the account with a 25% bonus - £1,000.
In summary, the
Bank of England's interest rate hike will impact the UK property market in
several ways. Fixed-rate mortgages will remain unaffected, but remortgages,
tracker and variable rate mortgages, as well as first-time buyers will be hit.
The end of the Help
to Buy scheme could also make it harder for first-time buyers to get onto the
property ladder. As always, it's essential to seek professional advice before
making any financial decisions in the current climate.
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#property #mortgages #fixedratemortgage #remortgage #firsttimebuyer #helptobuy
#mortgagerates #homebuyers #LifetimeISA #variableratemortgage
#trackerratemortgage
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