With interest rates likely to rise to 6% next year – the highest in 30 years, Martin Lewis, founder of the Money Saving Expert website, warned potential homebuyers to be cautious.
Since mortgage rates seemed to rise upto 6% in 2019, personal finance guru Martin Lewis urges prospective buyers to think twice.
The economic expert advised first-time homebuyers to wait until they are financially stable and confident they will stay in the house they purchase.
He encouraged those ready to buy a home and had saved enough money for a down payment and an affordable mortgage to “go on with it, buy your house” on Good Morning Britain.
Don’t buy your house if your motivation is something like, “This isn’t the house that I want, but I feel I should do it before everything goes wrong and it all goes belly up.”
On Monday, with interest rate worries on everyone’s mind, Mr. Lewis appeared on a morning show to discuss the state of the housing market.
According to Martin Lewis, creator of the Money Saving Expert website, there are “so many variables” and “no hard answers” when predicting the property market’s future.
Hundreds of mortgage proposals were studied from the market last week, and experts have speculated that mortgage rates will soon reach 30-year highs.
Mr. Lewis continued, “There are no solid right answers and I apologise if we play this back in two years and I was absolutely wrong, that is possible.”
The benchmark interest rate set by the Bank of England in September was raised and has remained at its new, higher level of 2.25 percent since then.
But the future of interest rates is unclear, and economists are projecting a possible 15% decline in home prices.
There has been a halt in transactions because lenders cannot determine a fair price in the current environment.
The base rate influences how much interest banks charge for various types of loans, such as mortgages and credit cards.
If interest rates rise and housing values fall, it may become more difficult for Britons to buy homes.
A top official at the Bank of England urged millions of borrowers to prepare for the worst on Monday, prompting mortgage lenders to take nearly 300 products from the market overnight.
Since Santander and HSBC have joined the rush of lenders pulling house loans or increasing rates, Huw Pill has warned borrowers to prepare for a “substantial” rate hike.
As a result, fewer house loans are being made available to buyers.
As the pound has fallen since Kwasi Kwarteng’s mini-Budget last week, there has been talking that the Bank of England will unleash more large rate hikes to prop it up.
Although the Chancellor later confessed that the £45 billion in tax cuts paid for with borrowing were drawn up “at extremely high speed,” he remains confident that it was the correct strategy.
The Government has made another about-face by erasing a tweet about stamp duty that said a first-time buyer in London could save £11,250 by purchasing a terraced house and an additional £1,050 a year on energy costs.
After publicly refuting the content of the “nonsense” tweet, Mr. Lewis urged the Government to delete it.
The specialist in saving money responded to it this morning on Twitter using straightforward mathematics to debunk the claim.
Mr. Lewis tweeted his disapproval to his many followers.
It’s only beneficial if you’re spending £500,000 or more on a home that you’ll be able to take advantage of this stamp duty break.
If you put down 10% on a fixed-rate mortgage, your monthly payment would be $2,400 ($28,000 annually). Who on £30,000 could afford that?
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