FIRST-TIME buyers and renters are set for a bumper 2018 as interest rates work in their favor.
Interest rates are expected to rise by 0.25 per cent in spring, increasing the Bank of England’s (BoE) base rate to 0.75 per cent. This will add an amount of £22 to a £175,000 tracker mortgage.
However, with more than half of all borrowers on fixed rates, it is likely that this raise will not be felt by all homeowners.
New homes being built has increased with 217,000 homes coming onto the market in 2016-17. This is an increase of 20 per cent from the year before. This brings the total back to levels seen before the financial crash. Still, it is a long way short of the 300,000 target set by the government.
Falling migration combined with construction activity picking up, means the supply of houses will be under less pressure than previous years.
First-time buyers will most likely be on the rise in 2018 with lending for buy-to-let decreasing. In 2015 landlords used buy-to-let finances to purchase up to 120,000 houses.
However, the Council of Mortgage Lenders predicts this number to fall to below 80,000 in 2018. Increased taxes and tougher lending regulations are giving the advantage to the homebuyer rather than property speculators.
This year’s Budget saw Chancellor Philip Hammond announced stamp duty for properties up to £300,000 purchased by first-time buyers would be abolished.
This move will save four out of five first-time buyers up to £5,000.
Sales director for Barratt Southern Counties Lynnette St Quintin said: “The stamp duty break, combined with continued availability of the Help To Buy equity loan scheme, means that there has never been a better time to buy a brand new home.”
Years of rent increases most likely means that landlords can no longer add to their rates. Average UK rent rose by less than 1 percent in 2017 in London.
Salaries being under pressure from inflation are another reason why people do not expect rates to rise this year.
Tenants will also be happy once the ban on letting agency fees arrive. At the moment there is no fixed date for this arriving but the Government has stated it will arrive in 2018.