Buying a property is a calculated risk, particularly at the moment. Let’s look at the key considerations if you intend to purchase a property at this time.
How does this recession affect the property market?
Eleven years ago, the UK plunged into a recession due to a subprime mortgage crisis when borrowers with less-than-average credit ratings were lent too much money. The US property market crashed and the rest is well-documented history.
The current recession has been caused by a public health emergency. This is an unprecedented circumstance requiring unprecedented initiatives to protect the public and economy. Chancellor Rishi Sunak waived stamp duty for homes valued between £150,000 and £500,000; as a result, July 2020 was the most active month for property purchases in over 10 years.
Experts advise a drop in property prices is still on the way, so it may be prudent for buyers to wait. Furthermore, what we value might change as we navigate the pandemic. Due to more people working from home, property market trends might shift away from city living. Necessary public health measures mean home builds are not as popular. It is crucial to focus on current information on buying a house to capitalise on opportunities and avoid potential losses.
How are lenders approaching mortgages during the pandemic?
If your earnings are affected, you will be able to borrow less; for example, some high street banks list furloughed earnings as £1. On the other hand, properties listed at a discount to their market value can yield a ‘gifted deposit’, which lenders can view favourably.
Most lenders have changed their borrowing guidelines due to employment uncertainty during the pandemic, yet savvy buyers will explore every available avenue regardless. Despite lenders tightening their purse strings, answers are available to the burning question of ‘where can I get information in buying a house?’
It is important to note that some things remain immune to Covid-19. Securing a mortgage still means you have equity. Buying a house is a process teeming with variables. One of the greatest assets on your journey is taking the time to understand the current market conditions and how they align with your circumstances. Remember that you are looking at your circumstances and no one else’s. It pays to have a flexible approach and consider your options to take advantage of the opportunities available.
