Estate agents have seen property prices fall slightly in recent weeks with interest rates spiking. It isn’t unexpected, however. The country has been in turmoil for months, with changing leaders, disastrous mini-budgets, and tax hikes. While the country seems to be on a stable footing now, there’s a long way to go before interest rates decrease and property prices increase. So, what does it all mean for new buyers and homeowners?
Interest rates spell trouble for buyers
Property prices began to fall by at least 10% and it had a considerable impact on the market; rising interest rates only added to the misery. Even the most seasoned estate agents can’t fix the uncertainty. Buyers will especially feel the pinch as mortgage lenders almost double interest rates.
For example, couples looking to purchase a home a few months ago were presented with interest rates of 2.5%. Now, they face 5% or more. National interest rates are hovering around 3% but that doesn’t reflect all sectors. Interest rates have soared, and new buyers face a tricky decision: opt for a fixed interest rate or a variable rate. Both come with their pitfalls.
Variable and fixed rates
Homeowners are struggling with the increase in interest rates. For instance, some have locked in a mortgage interest rate of 3.5% whereas others locked in at 5%. Others are on a variable-rate mortgage and could see their interest rates rise further. Estate agents are constantly seeing property owners looking to sell because they simply cannot afford their homes. It’s a scary notion but that is the consequence of soaring interest rates.
Why are homeowners looking to offload their homes?
The harsh reality of the interest rate hike causes a ripple effect on industries across the board. Even when the increase is marginal, the homeowners are seeing monthly mortgage payments increase by sizable amounts. That, coupled with the cost-of-living crisis, is making the situation untenable. Estate agents are seeing demand for their services as more need to sell.
The task estate agents face
Property prices are decreasing but interest rates are soaring, and estate agents are in constant demand. Buyers are looking for affordable homes with affordable mortgage rates and sellers want to sell homes they can’t afford anymore. Estate agents are needed more so than ever as the demand for affordable homes continues. It’s a frustrating situation for all because there is no easy fix, and the problems could continue for the next two or three years.
Challenges can be overcome
There is little doubt the country is facing great difficulties in the years ahead. Things could get worse; then again, they could be worse. In truth, the cost-of-living crisis, along with the turmoil in the UK government has caused problems with soaring interest rates and declining house prices. Fortunately, these economic challenges can be overcome and when they are, things will hopefully be brighter and better. Estate agents will play a crucial role in the years ahead, especially since the demand for affordable homes increases.