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Gloucestershire Business News

Mortgage affordability on the rise. The Mortgage Brain

By Enzo Mora, CEO and founder of The Mortgage Brain 

The detail of the upcoming Budget is still under wraps, but inflation is playing ball.

I'm never sure how much attention the general public gives to wider economic issues and how it affects the pound in their pocket, but the rate of inflation seems to get noticed whichever direction it is heading.

The good news is that it's just dropped to 1.7%, so prices are rising at their slowest rate for three and a half years. This is likely to pave the way for an interest cut decision at the Bank of England's next monetary committee meeting and could mean a shift downwards for mortgage rates.

Affordability is key

Halifax reports that mortgage affordability has been easing, thanks to strong wage growth and falling interest rates. This has boosted confidence among potential buyers, with the number of mortgages agreed up over 40% in the last year and now at their highest level since July 2022.

While improved mortgage affordability should continue to support buyer activity, boosted by anticipated further cuts to interest rates, housing costs remain a challenge for some.

Mortgage rates can be confusing, with some still nudging up, while others are heading down. We work with all the leading lenders, so can access the best mortgage deals on the market for our customers, which you would not be able to get by going direct.

It may seem obvious, but the less you borrow the better interest rate you can get, and having those all-important discussions with our expert advisors will often come up with a way to a more affordable mortgage.

Prices creeping up

Meanwhile, the latest official house price indicators from the government's ONS shows price growth six months in a row for year-on-year prices. The average UK house price increased by 2.8% to £293,000 in the 12 months to August.

Of course, local housing markets may show a different picture and some of our customers have been able to secure price reductions on properties that have been sticking, which ticks the more affordable box.

Nearly a third (32%) of homes for sale on Zoopla are 'chain-free'. Outside London, 1 and 2-bed flats are most likely to be chain-free, while in London 2 and 3- bed houses are likely to be chain-free, which could speed up a sale.

Benefits of buying new and right-sizing

When budgets are tight, the benefits of buying a brand-new home start to add up. No renovation costs are incurred, and you can start living the dream from day one in an energy efficient home with a new kitchen, bathroom and wonderfully painted walls! Our new-build specialist mortgage advisers are on hand with all the UK's leading housebuilders, so buying new is a stress-free option.

A new report from Barclays Property Insights - Right-sizing Revolution - looks at unlocking untapped capacity in the housing market and finds that, alongside building new homes, 'right-sizing' (moving to a home with fewer bedrooms) could be an important part of the solution to the UK's complex housing crisis. To work, this needs to be properly incentivised with grants, vouchers or the ability to offset moving costs against Stamp Duty.

The Barclays report notes that 85% of owner-occupied homes in England and Wales contain one or more 'spare' bedrooms and are therefore 'under-occupied'. This constricts the availability of larger homes for families and younger buyers, causing a ripple effect throughout the housing market.

It's an interesting concept, too late for this Budget perhaps, but maybe the next...

To find out more about The Mortgage Brain, visit www.themortgagebrain.net or call 0333 340 8888.

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