Should You Buy A House In 2013?
Well the New Year is upon us and many first time buyers might be asking themselves a very important question right now, ‘Should I Buy A House In 2013’? The last few years have been turbulent in the UK housing market, but not as turbulent as you might think given the state of the economy. Does this mean that the economic dust has finally settled and it’s now safe to jump on to the much coveted housing ladder? I’m reluctant to give a firm yes or no answer to this question but here are a few important points to consider before making the leap!
I recently had a chat with my mortgage advisor and he informed me that first time buyers can currently get a two year fixed rate mortgage at a rate of 3.99% with a 10% deposit & no set up fee, if you want a 5 year fixed rate it’s more like 4.59%. These rates are still extremely low when you consider the mortgage rates of past decades and are well worth consideration. Although interest rates have been low for a long time now, there are no guarantees they will stay that way. Inflation is still running above target and market confidence in the UK economy could change overnight.
The banks have been surviving on cheap credit and handouts for a long time now. I know bank lending criteria is tight at the moment. with many banks cherry picking only the most credit worthy borrowers, but this doesn’t mean things can’t get worse. If the cheap credit and money printing were to stop, we might see banks once again withdrawing the best mortgage rates and tightening lending criteria further.
There are two ways you can view this information. If you desperately want to get on the property ladder it might be wise to take advantage of the low rates and get a mortgage while you still can. On the other hand, if mortgage availability does dry up and rates do increase, this could negatively affect house prices and you might find yourself wishing you’d waited that bit longer but then you might not then be able to get a mortgage if you do decide to wait.
If I were thinking of buying a house in 2013 I would be asking myself the following questions
1) Am I happy to stay put for at least the next 5 years? ~ The Economy is still in a precarious position and the next few years could well throw up some shocks. If house prices were to drop suddenly you might find yourself trapped in a house you can’t sell due to negative equity. If you’re happy where you live and don’t see any reason to leave the area in the near future, then buying a property might be worth the investment when you consider the dead money you’d be paying out in rent.
2) Do I Feel Secure In My Job? ~ Some major names on the UK high street are really feeling the heat at the moment. The first quarter of 2013 could see more retail casualties with other sectors suffering as a result. If you were to lose your newly purchased home due to a job loss, you might well regret the purchase and wish you’d protected your credit rating to buy a house at a later date.
3) Could The House I Want To Buy Accommodate A Family? ~ You might not be planning a family right now but life does have a tendency to throw up surprises! In an uncertain economy with future house prices in the balance, it’s always best to plan for the unexpected if it’s within your budget.
4) What Would I Regret More? ~ If the affordability & availability of mortgages were to take a turn for the worse in 2013, what would you regret more? Buying a house and seeing it’s value temporarily drop (When you take into account long term house price trends), or not buying a house while you had the chance?
Think Long Term
If you’re buying a house with a short term view then it’s always a game of chance, sometimes the market will go for you and sometimes against. If you buy a house in 2013 with a long term view, you’re more likely to be happy with your decision, though as we’ve mentioned life does have a tendency to throw up surprises.