If you are looking to buy your first home but worried about mortgage rates and house prices, here are the arguments for and against buying a home in the current market.
Yes to delaying your house purchase
- Mortgage rates have increased over the past year so it is more expensive to borrow money to buy
- The consensus is that house prices will fall over the next two years, so anyone who buys now risks seeing the value of their first home plummet.
- If you’ve only put down a small deposit and house prices fall, you could end up in negative equity. Though this would only be an issue if you wanted to sell your home.
- Should the predictions come true and house prices continue to fall, by holding off you may not need such a big mortgage loan and the minimum deposit by the lender required may be smaller too.
- If you have the option to live with family without paying rent, you might be able to save a larger deposit. This would increase the equity in your home when you do come to buy and make you eligible for a cheaper mortgage deal.
No to delaying your house purchase
- Owning a home means you don’t have to worry about your landlord hiking your rent or suddenly giving you notice to move out of your home.
- Moving out of a rental property means you would be paying off your own mortgage, rather than someone else’s.
- While there are plenty of predictions about house prices, we can’t know for certain how much they will fall by, so you could be waiting for a long time for them to hit rock-bottom.
- House prices will likely take a substantial hit, but another downside of waiting is that this might come at the expense of being able to secure a cheaper mortgage.
- If you think you will want to stay in your home for at least three years then you could ride out the suspected downturn in house prices.
- If you’re putting down a large deposit then this reduces the chance of your ending up in negative equity.
- Now could be a good time to find a bargain; if a seller wants a quick sale before rates peak next year then you might find that being a first-time buyer gives you a greater advantage as you have no chain to hold up the process.
