25 Jul, 2023/ by Homeward Legal /News, Remortgage

There is no doubt that people are finding it difficult to manage their household budgets in the face of external influences over which they have little or no control.

The financial situation in the United Kingdom is a complex problem. It is very easy for armchair financiers to point the finger at a particular source and cause of the problems that are besetting the property industry at the moment: the effects of the Brexit deal, the rather disastrous “mini-budget” in September 2022, the war in Ukraine, Russia's apparent stranglehold on energy sources across Europe, the ongoing fallout from the Covid pandemic, and so on.

But to focus on one element underestimates the interconnectedness of everything that has led the country to this point, where inflation is remaining stubbornly high, and the Bank of England's optimistic remedial action by imposing successive base interest rate rises having a knock-on impact on where the mortgage lenders set the interest rates for their loans to homebuyers.

It is, of course, a worrying time for those who are already on the move and those who are planning to do so soon. And not the least for those who have already taken out a mortgage and have completed their transaction and moved into their new property.

But, while there are continuing concerns with the financial climate and what each governmental and Bank of England decision means to the person moving into the street, are there any glimmers of hope that can be grasped to help reduce the fears?

An interesting article by BBC News identifies a few areas showing that, while not great, they are perhaps not as bad as they could be.

Now, picking up on that and, while there is no intention of diminishing the importance of the challenges and many uncertainties that look likely to continue for a while yet, there are certainly some areas where there is some prospect of hope.

The pandemic helped… but only to a degree

It was a strange and worrying time for the country when the Government dictated the extent of movement. But, as people were forced to stay behind closed doors during a series of lockdowns, it had the beneficial effect of increasing savings.

This is because people were no longer forking out for luxuries and expensive foreign holidays as they couldn't travel and, instead, were left with the option of a true staycation thereby not spending money every day on meals out, entertainment and so on that they might otherwise have done.

The practical result of this action meant that the money saved could be put into paying off part of the mortgage, if they so wished (as highlighted in the BBC News article). Therefore, any plans to move meant that they would have fewer debts to pay off and they could afford more - or have a lesser mortgage to deal with at the new property.

In parallel with this, especially for those in more urban areas, suddenly, a lot of people realized that what they wanted from their property was more space - inside (perhaps for an office to work from home, for example) and outside the property (so that they could relax outside without having to travel somewhere to achieve it).

The demand for such homes had a direct impact on house prices (also noted in the BBC News article), which inevitably mushroomed, as the surfeit of demand initially outstripped supply. And those who were able to sell their home then could take advantage of the increased equity (value of the home minus any outstanding loans secured on it) with which to buy their next place.

House prices have not crashed

In previous years, such as the early nineties, the volatile housing market reacted to the broader financial position with a slump in prices - often resulting in negative equity for the seller (the price paid by the buyer minus the amount from loans secured on the property being negative). For the moment, it would appear that house prices are surprisingly resilient (dependent on location and the type of property, naturally), so the “boom and bust” fluctuations felt in the past aren't happening… at least not yet.

It should be noted that the encouraging effects of the pandemic have probably diminished as time has gone by and those who were planning to move have likely already done it. And this position has to be balanced with the impact of the increased interest rates by the Bank of England (currently increased to 5% on 22 June 2023) as they try to stem the somewhat stagnant high inflation rates, although the inflation rate has dropped more than expected since.

The practical upshot of this news is that there is unlikely to be a further interest rate rise for July 2023, which is good news for borrowers (although future rises are not ruled out) in the interim.

On this financial rollercoaster, too, analysis of the residential market by Landmark Information indicates that the number of properties being put on to the market with agents is reducing, while demand appears to be quite static. If this trend continues then it's possible that future price rises are likely.

If this relative housing market stability continues, it ensures that both buyers and sellers remain on board to complete their transactions rather than falling through.

But it should also be noted that house prices have fallen for three successive months (albeit slowly), as is shown in the June 2023 Halifax House Price Index.

Amenable buyers and sellers

If the relationship between buyers and sellers remains amicable and flexible, where options are discussed and compromises agreed quickly, the likelihood of continued and seamless property business continues, without incurring unnecessary expense trying to sort out any issues.

While buyers are looking at what they can afford, sellers are also looking at what they can pare back on with the asking price - shown to be falling but not plummeting in recent weeks - to entice the buyers in.

This symbiotic relationship between buyer and seller, facilitated by the conveyancing solicitors on both sides, is an important one to cultivate. If this is in place, however tight the finances are, some form of agreement is more likely to be reached.

Affordable conveyancing is available

There are two parts of the process that worry many home-movers - partly because they don't understand it (and neither should they necessarily), and mainly because of the value for money they perceive they are getting for their outlay: the survey, and conveyancing.

Most mortgage lenders will require at least a basic survey to be carried out, and it's very easy to opt for the cheapest and most basic report to save money. But this may not be wise, as significant problems that weren't identified may become apparent - particularly in older properties - once you have completed or have lived in the home for a while. Help and guidance can be found at Surveyor Local.

Some consider carrying out conveyancing themselves as a way of saving money. But, while this is perfectly acceptable and legal, conveyancing is best left to the professionals. It is time-consuming, and the novice may not appreciate the legal nuances or even the jargon that's involved.

But there are economical options available. What many homebuyers want is a swift process at as low a price as possible that provides exactly what is required.

And that's where Homeward Legal comes in! Homeward Legal will provide a quote that will not change - what you are quoted is what you pay (there are some unforeseen items that might arise during the purchase and/or sale, but the solicitor discusses these and their cost as they come up).

In addition, to protect the homebuyer further, Homeward Legal operates a “no completion, no fee” promise, which ensures that, should the purchase or sale not go through as planned to completion status, no payment is required.

Call to get your conveyancing quote started, or discuss you concerns with your plans to move.

Or you can get a quick quote, using Homeward Legal's easy-to-use quote generator.

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