By Charlie Higgs – Owner Village Properties
Interest Rate Cuts and Strong Demand Push Asking Prices to New Record
The recently announced mortgage interest rate cuts brings good news for both buyers and sellers as we approach the prime late spring market in Reading.
Three of the UKs big mortgage lenders recently confirmed the reduction of over 100 mortgage deals after several weeks of increases.
HSBC, TSB and Barclays have all announced motgage interest rate cuts and brokers are confident that the cuts will prompt other lenders to follow suit.
The banks increased borrowing costs in previous months after forecasts of an interest rate cut by the Bank of England were pushed back because of stubborn inflation and a rise in swap rates, a market indicator used by banks and building societies to price their fixed loans.
Whilst the Bank of England held borrowing costs at 5.25 per cent last week, a 16-year high, it signalled a rate cut could come as soon as next month, particularly given the recent news of a fall in inflation.
UK inflation has fallen to 2.3%, which is just shy of the Bank of England’s target of 2%. This marks its lowest level in almost three years.
Mortgage markets have therefore, adjusted their forecasts, signalling a potential end to the recent trend of lenders increasing their rates which has resulted in the announced cuts.
Asking Prices Reach Record High
With the reduced cost borrowing seen by the cuts to mortgage interest rates, the pend up demand in the market, caused by both the high cost of borrowing as well as the considerable increase in property rental values, is fueling stronger buyer demand in what is traditionally the prime selling season.
High demand and lower levels of supply ineviatly lead to higher prices. This is backed up by Rightmove’s recently published House Price Index which confirms that asking prices hit a record high in May as homeowners, buoyed by the news of lower mortgage interest rates and stronger buyer demand, have become more optimistic.
The latest house price index shows that the average price of property coming to the market reached a new record of £375,131, rising by 0.8% at the start of May. Asking prices are 0.6% higher than this time last year, although there is of course no guarantee that homes will sell at these prices.
The data from Rightmove confirms that the price growth continues to be led by the largest-homes, top-of-the-ladder sector, with prices in this sector up by an average of 1.3% compared with last year and suggests that the market is being driven by pent-up demand.
The report further confirms that the number of sales being agreed during the first four months of the year is 17% higher than last year, outstripping the 12% increase in the number of new sellers coming to market, highlighting the strength of buyer demand.
A significant issue within the property market is not finding a property or indeed a buyer, but transaction times, this is confirmed in the Rightmove report. The average time it takes for under-offer homes to reach completion is a painful 154 days, that’s almost 6 months to complete.
Given that it’s currently taking on average 62 days to find a buyer before the legal process even begins, would-be sellers hoping to be in a new home for Christmas need to be taking action now.
Recently Listed Homes by Village Properties
Here are just a few of the properties recently listed for sale from our Tilehurst Office –
House for sale in Whistley Green – Guide Price £650,000
House for sale in Tilehurst – Guide Price £500,000
House for sale in Tilehurst – Over £375,000
Flat for Sale in Reading – Guide Price £280,000
To see the very latest homes coming to the market, click ‘New to market homes’, this lists all of the very latest homes as they come to the market.
Or see our ‘Recently Sold Properties’.
Considering a Spring move?
If you are thinking of buying or selling a home in Tilehurst, Twyford or the surrounding areas of Reading, please feel free to call me for an informal chat, I’ll be pleased to help you if I can.
You can also book a Face to Face Valuation, or use our Instant Online Valuation tool.
Thank you for reading
Charlie Higgs – Village Properties Tilehurst & Twyford
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