What goes up must come down?

Phillips George
27 June 2023
Buying | Estate Agents | Selling

Leicester City have gone down while our mortgages have gone up

The heady days of winning the Premiership are but a distant memory for Leicester City fans, and reality bites for the heroes who brought such joy to the city just six years ago. But as soon as we turn our attention away from a forgettable season on the football field, we focus on more mundane matters in the housing market, what has been down has to eventually come back up. Or does it?

It is easy to get caught up in the hype surrounding recent mortgage rates hikes in the UK. Afterall, we have been enjoying historically low interest rates in recent years and perhaps considering them the norm, just as many of us were taking Premiership status for granted on the pitch.

What exactly makes mortgage rates high?

Let’s take a closer look. Over the last 27 years, since 1995, the average mortgage rate in the UK has been 5.62% according to Mortgageable in a recent article. The lowest rate has been 3.59% in September 2021 and peaked at a whopping 8.87% in September 1998. The average mortgage rate in December 2022 was 5.88%.

All of this suggests that current mortgage rates are well within the norm for the UK. However, the bad news is for those coming to the end of a fixed rate mortgage deal, who will see large increases in payments. Hopefully we have all budgeted properly and understood that mortgages can go up as well as down, and not stretched budgets too far.

The mortgage market is never predictable, but Clare Phillips, Partner at Phillips George is concerned that we all might need a bit of a reality check; “I think the halcyon days of 3 percent mortgages are well and truly over. We can expect to be paying higher rates for the foreseeable future, so it is best to make sure you factor in higher mortgage costs in your budget.”

Silver linings

It is important to keep all of this in perspective. Demand for housing is down as buyers consider their options in a flat market. As house prices reduce this creates new opportunities for buyers. Less pressure on the market means more sensible prices for buyers, and it is important to remember that most sellers are also buyers.

Clare thinks this all points to a reset; “There is no point in reminiscing about the recent crazy housing market, it was a rare event, brought to the boil by a combination of tax breaks, a pandemic and historically low interest rates. See the current market as one of opportunity to find good quality housing at excellent prices. Bargains are out there to be found. Most importantly remember that if you sell at a lower price than you might have last year, you will almost certainly buy at a more sensible price too.”

In this more challenging environment, it is even more important to choose the best estate agent, one who has experienced this all before, one with local knowledge, and a commitment to excellence in the local Leicestershire community.

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Clare Phillips
Clare Phillips, Partner
Clare has been in the industry since 1998. Her career started as an administrator and she has worked through each role in estate agency from negotiator, sales progressor, valuer, manager and culminating in opening Phillips George as a co-founding partner. Through Clare’s career she has obtained professional qualifications with both NAEA (national association of estate agents) and ARLA (association of residential letting agents) to ensure that she delivers a first class service to all of her clients. Clare’s favourite part of estate agency and lettings is helping customers achieve their goals and making the process as smooth as possible for them.