How the mortgage landscape is shifting in favour of buyers - Jamie Megson

There was a mad rush by many to re-mortgage and secure rates before they increased again.

As we start the new year, there’s positive news. The market is changing to work much more in favour of sellers, with fixed mortgage rates currently sitting at around 4.5 per cent.

This may still seem high in comparison to the past couple of years, however, it is lower than the average fixed rate, of around five per cent, going back over 100 years, excluding the financial crash in 2008 up until last year.

We’re entering a new normal, and its likely fixed rates will drop slightly more, to around four per cent, which is affordable for many.

Price reductions of around four per cent to five per cent of asking price on properties are also starting to happen and it's likely this will continue early this year as buyers rethink what they are willing to spend on a property.

Towards spring, I think we are likely to see asking prices come down around 10 per cent, although the last two years were inflated anyway.

Lenders had their new lending targets set on January 1 and available housing stock is increasing, meaning the banks will once again be looking for new business, which should help create a competitive marketplace to the advantage of buyers.

This year will see many more first-time buyers than we have seen for a while as rates and prices cool – and 2023 is also the year of the re-mortgage.

There are more mortgage deals due to end this year than any other in history – and around £7bn more than 2022 - so many people will need to factor in going from a one to two per cent interest rate in 2020, to somewhere around four per cent this year.

Looking to buy this year? Get advice and quotes early.

Speak to a mortgage broker to establish what you can afford; what you can borrow or want to pay now will not be the same as six, or even three, months ago – things are constantly changing.

Get quotes from solicitors as the stamp duty rates recently changed as well in a bid to kick start the economy.

The Stamp Duty Land Tax (Temporary Relief) Bill passed through the House of Lords this month and is ready for Royal Assent, meaning a nil rate threshold for all purchases from £125,000 to £250,000.

Don’t wait too long or be put off by excessively negative media headlines; prices and rates are definitely cooling.

Trying to time your purchase at the bottom of the market is almost impossible, and even then - when it hits the bottom - everybody wants to buy, it becomes a sellers’ market again, and the bidding wars restart.

If you find a house you like, can get it for a good price and have spoken to a mortgage advisor to crunch the numbers, then go for it.

Jamie Megson is a director at law firm Holden Smith.