2021 turned out a very good year for house prices across the U.K. According to the Office for National Statistics’ (ONS) Property Index, prices overall in the U.K. in the previous twelve months to November 2021 rose by 10.0% and in the West Country by 12.9%.
In hindsight, the property market may not have needed the UK’s Chancellor’s 2020/21 stamp duty `holiday’ on property sales, but it showed the importance that Government places on the need to support house prices in times of crisis and unknowable outcomes due, in this case, to a pandemic.
For 2022, the consensus is that house prices will continue to rise but more gently. Factors in support of this trend include a lack of new housing against rising demand, the structural support housing offers the U.K. economy and a conviction that interest rates will stay low to keep mortgage interest rates down and to help service the national debt.
However, steps implemented nationally might not apply internationally. House prices and stock markets in developed economies are considered to be in `bubble’ territory; in particular, a decline in U.S. house prices would impact world markets, create recessionary pressures, potentially cause interest rates to rise leading to forced sales.
One way to guard against this outcome is to fix any outstanding mortgage for as long and as cheaply as possible.
Up to now, this has been not always been the best strategy; interest rates have ground relentlessly lower leaving the cautious scrabbling for the exit, to suffer early repayment charges, to fix at a lower rate only to have to repeat the exercise.
In 2011, the interest on a 10-year fixed-rate mortgage was 5.00%, with high incidental charges. Now a 10-year fixed-rate mortgage can be had at an interest rate around 2.20%, charges aside, a discount of more than 50% to a decade ago.
So, has the time come for a long-term fixed-rate mortgage?
Inflation, ballooning national debt and currency devaluation are concerns that should have a bearing on any decision on how an individual manages or views mortgage debt.
The financial world may go back to what it was and interest rates continue to reduce, even go negative; but, if a deflationary world has turned inflationary, a long-dated fixed-term mortgage at current interest rates offers reasonably priced insurance for the length of the mortgage.
Long-term fixed-rate mortgage up to 40 years exist but for now the most competitive area of the market remains the ten-year fixed-term mortgage.
In conclusion, when thinking about securing a mortgage, or a re-mortgage, a review of the whole market is the best way forward. Thought should be given to the long-term fixed-rate market based on sound advice on product detail and the objective assessment of personal circumstances.
We have our very own inhouse Mortgage Advisor, Samantha Allnutt at WBW Mortgages, who is available to discuss any mortgage enquires.
- She can search whole of the mortgage market for you
- She offers a mortgage recommendation tailored just for you
- No Jargon; Just clear, straightforward advice
How can she help you?
She can offer a no cost, no obligation, initial consultation to find out more about your mortgage aims and objectives.
To book your consultation please call Sam on: 07766901797 or email sam@wbwmortgages.co.uk
If you would like to discuss any of the information raised in the article then please email lawyer@wbw.co.uk or call 01404 548077.
Your home may be repossessed if you do not keep up repayments on your mortgage.
