The rule of thumb is, if you can you can take on the mortgage at 7%, take it. If you can’t, don’t consider it ‘free money’
In a rising market, buy the best house you can possibly afford – and buy it quickly. In a months’ time it’s going to be much dearer. Any significant reduction or cash flow increase has a significant impact on all parties. The lower rates will have a double effect. It affects both the market and buyers’ budgets.
Lower interest rates make loans more affordable; however, the other side to this is that homeowners are holding onto properties. The properties that would ordinarily hit the market aren’t, meaning less properties creating more competition.
With fewer properties in the market, people are paying more to secure them. Auctions with 1-2 buyers now attract 5-6. A smart buyer will find a property which is market price, ‘off market’ or pre competition and try and buy through a private sale. They can keep or buy a more expensive property, allowing them to stay in the market longer.
Families are getting mortgage relief if they use the interest rate cuts to their advantage. The biggest risks here are for homebuyers taking on debt. Every week you’re out of the market it is costing you money. I would buy first – not sell first in this market. If you sell first, you might not secure a property for a few months.
The rule of thumb is, if you can you can take on the mortgage at 7%, take it. If you can’t, don’t consider it ‘free money’
