Getting a mortgage – is now the time to act?

The mortgage and housing markets in the UK have been at the forefront of the financial news over recent months, namely due to soaring interest rates, easing house prices, and decreased affordability. This has been added to by the credit crunch that was sparked in the sub-prime sector in the United States and quickly spread across the pond to the UK as well as to other countries, affecting consumer accessibility to mortgages even further. First time buyers have had it particularly tough over the past couple of years, with sky high property prices to cope with, no equity from any previous property to put down by way of a deposit, and a series of five interest rate rises to deal with on top of all that.

However, there may be light at the end of the tunnel for those looking to get onto the property ladder. Not only are experts predicting that interest rates will not stabilize as a result of a reduction in CPI inflation combined with the effects of the credit crunch, but there are also indications that house prices are going to start falling, with many experts stating that there is a strong chance of downward movement in property prices over the coming months.

Of course, this is not really good news for those that already own their own home, particularly for those that have take out a mortgage in the last year or two, which means that they probably paid a huge amount for the property. Some people that took out 100% loan to value mortgages could even find themselves plunged into negative equity depending on the level by which house prices fall. The Royal Institute of Chartered Surveyors recently reported the first negative house price index reading in two years, and officials are predicting that there is a chance that properties in the London area could drop in value by around 10%.

A number of mortgage advisers are now telling prospective first time buyers to stay put and let the market settle for a number of reasons. Firstly, the recent turmoil that has hit the financial markets in the UK has caused unrest and uneasiness, resulting in borrowers feeling ever cautious about whether or not to take out a mortgage loan, and lenders becoming far more stringent about who they will lend money to and what sort of interest rates they will be charging.

Another reason that many first time buyers are being advised to stay put is because of the interest rates, which have shot up a total of five times over the past year, leaving those taking on new mortgages to deal with the prospect of having to either fix their interest rates at very high levels or make huge repayments on a variable rate mortgage. Finally, the prospect of house prices falling, which has been predicted by many experts, has also resulted in many experts advising first time buyers to wait it out and see what happens.

Although many first time buyers may be in the mid set that it’s now or never and that if they don’t make a move now they will never get onto the property ladder there may be a number of benefits for those that decide to take a wait and see stance. A number of potential first time buyers have decided to either continue living with parents or opt for rented accommodation to buy them more time to assess the situation rather than having to rush into a property purchase that they may find unaffordable.

For those that do decide to wait it out there is a possibility that house prices will come down further towards the end of the year, which means that those taking out a mortgage may not have to take out quite such a large loan in order to fund their property purchase. Some experts also feel that there is a chance that interest rates could come down, and this means that buyers can either enjoy a better value fixed rate deal or can enjoy more affordable repayments. In addition to this experts feel that buyers could benefit from allowing the mortgage and financial markets to settle down following the recent turmoil, which could result in great accessibility to more affordable mortgages.

A number of agencies and industry professionals have reported a slow down in the mortgage market, and this could spell good news for potential first time buyers that are prepared to wait it out and see w2hat happens with the mortgage market, interest rates, and house prices, all of which could make a huge difference to accessibility and affordability when it comes to mortgages.