Is it cheaper to rent or to buy a property?
According to Rightmove, the average monthly mortgage payment for a typical first-time-buyer home has increased by 13% (+£100) since December last year following four interest rate rises, although this is only 11% (+£87) higher than ten years ago. So, although we’ve seen strong house price growth, we’ve also seen historically low interest rates which has balanced costs out. By contrast, equivalent monthly rental payments are 40% higher than ten years ago, as tenants feel the full effect of rising costs and are currently rising at the fastest pace that Rightmove has ever recorded. The gap in payments between paying off a mortgage and paying your monthly rent has narrowed, meaning it is no longer notably cheaper to rent in terms of monthly outgoings.
When is the next Bank of England base rate meeting?
The next meeting is on 16th June. The Monetary Policy Committee meets around every 6 weeks to discuss if the base rate should go up or down. As we know, the most recent base rate meeting was on 5th May, and that’s when the base rate was increased to 1%. It was the fourth rise since December 2021, when the base rate stood at just 0.1%. If you have any questions about how this will potentially affect your mortgage, it’s always a good idea to speak to a mortgage professional.
What does the future hold for the UK housing market?
Analysis from Capital Economics predicts that the Bank of England base rate would hit 3%** in the second half of 2023, which will affect mortgage rates. It’s worth remembering that, in context, these rates are still historically low. As for house prices – with so much uncertainty, it’s difficult to know whether there will be a correction in the market. The effects of the increased cost of living and rising interest rates could filter through to property later in the year and at the start of 2023. To make predictions, we have to first see what’s on the other side of the inflation spike. We do know that we’re currently still seeing a continued surge in the volume of new buyers looking to purchase the limited housing stock available, and so we would encourage anyone thinking of selling to take advantage of this key window of opportunity, now.