Thursday, 17th October 2024
Inflation has fallen to 1.7% in September, latest figures have revealed, but what does it mean for home buyers and the cost of living and is now a good time to buy a house? We spoke to Joe Booth, national account manager at RSC New Homes, to find out everything you need to know.
The Office for National Statistics monitors changes in prices for a virtual “basket of goods” over time to calculate inflation. This is known as the consumer price index and takes into account the cost of hundreds of things including food and fuel.
“The latest inflation rates will create increased positivity within the housing industry and the wider economy, as it should bring stability to the markets and mortgage rates over the coming months,” Joe explained. “With inflation lower than the Bank of England’s 2% target and at its lowest level in three years, a reduction in interest rates is likely to be on the horizon.”
The Bank of England’s Monetary Policy Committee meets on November 7 when it will announce the base rate, also known as the bank rate or simply the interest rate. If the bank rate changes, then lenders and banks will normally change their interest rates on borrowing and savings.
“With Andrew Bailey, governor of the Bank of England, potentially looking to take a more aggressive approach when it comes to interest rates cuts, it may even be likely that a reduction of more than 0.25% is not completely out of the equation,” Joe said.
“Now, of course, it must be considered that reduction in interest rates doesn’t necessarily mean a reduction in mortgage rates. We have seen over the last couple of weeks rates have been increasing mainly due to the impending government budget.”
When you buy a new home in England it’s likely you’ll have to pay Stamp Duty Land Tax, known commonly as stamp duty. The rate you’ll pay depends on when you buy the property, the purchase price and if you’re a first time buyer, will own more than one property or are a homeowner buying your next house. The rate of stamp duty is due to change from April 2025.
Example: The four-bedroom Heatherington at Orchard Place in Thornton, priced from £406,995.
The stamp duty is currently set at £7,849 for those who have previously owned a property.
From April, the stamp duty on this home would be £10,349.
“It’s important to remember to budget for things like stamp duty and solicitor’s fees when you’re buying a home,” Joe added.
“Banks and building societies are still looking to offer enhanced affordability and increase terms to make mortgage repayments more affordable, especially for first-time buyers looking to take their first step onto the property ladder,” Joe explained.
“Some lenders offer enhanced affordability on mortgage products for homes that are A or B rated for energy efficiency. This means that because the homeowner will be spending less on their energy bills, they should have more funds available to put towards their mortgage repayments.”
We’ve put together an easy to follow guide to green mortgages, available to read here.
“There is no better time to be speaking to the professionals and getting all the information you need to purchase your dream home,” Joe added.
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