Buyers prepared to spend more money on their homes

Buyers
The desire to change where we live, acquire more space both inside and out, and create a dedicated area to enable us to work from home, are all knock-on effects of the pandemic. But as house prices continue to soar along with the summer temperatures, there are signs that these are not just temporary changes. The latest house price index from Halifax indicates that the current strength in house prices also ‘points to a deeper and long-lasting change as buyers preferences shift in anticipation of new, post-pandemic lifestyles – as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing’. Over the past 18 months, our homes have become much more than just somewhere to go to sleep at the end of the day – they have been where we have lived, worked, educated our children, holidayed and ultimately provided a safe haven. People have either bought bigger homes further out, encouraged by the stamp duty holiday, and/or they have improved their existing living arrangements, extending, refurbishing, installing a pool or hot tub and reinvigorating the garden. It is not just one-way traffic to the countryside either. Some buyers are gearing up to spend more time in London once again as offices gradually re-open. They may have moved out to the country and bought a big family home with more space but they now want a pied a Terre in the capital so that they can be in London when they need to be. The fact that people are prepared to spend more income on their homes is an interesting shift. With mortgage rates so low, this should enable them to generate some real buying power. What’s more, these low mortgage rates, which make borrowing much more affordable, don’t look as if they are going anywhere anytime soon. With two-year fixed rates available from sub-1 per cent and five-year fixes from sub-1.5 per cent, borrowing really is cheap. If you combine this with the fact that many people have more savings because they haven’t been spending as much during lockdown, it means deposits are also more substantial than they might otherwise have been. Lenders buyers have plenty of money to lend and are keen to do so but there are still some people who are finding it harder to get a mortgage such as the self-employed, whose incomes have been scrutinized more closely since Covid. Those with more complex income streams, such as day-rate contractors, company directors, those with retained profits in a business or in receipt of dividends, may also find lenders asking more questions. It may not be impossible to get a mortgage but it may be more tricky, which is where a whole-of-market mortgage broker such as AWS Private Finance will be able to help. Do get in touch if you are thinking of buying a new property or extending your existing home to see what deals are available to you.
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