21st December 2015

What's In Store For 2016?

At the beginning of 2015 I recall wishing our clients, past, present and future, a happy and prosperous new year. On reflection, our wish came true as rates remained low whilst property valuations steadily rose during the year. In fact house prices soared 7% during the year. Compare that to the miserly 1% return on savings (if you were lucky) and it is easy to see why so many people like property ownership.

This was helped by the government making efforts to promote activity in the housing market by extending the Right to Buy scheme, Help to Buy ISA, Help to Buy shared ownership and the starter homes programme. These changes have yet to make their full impact but all of these will be a positive change when it comes to the possibility of steady growth throughout 2016.

We consider the most significant affect on the market this year will be the increase in Stamp duty for Buy to let investors which will be an extra 3% from 6th April, adding £7,500 to the bill on a £250,000 purchase price. We see this as creating increased activity for house purchases in the short term as investors rush to meet the deadline and save money. However on the negative side, once 6th April comes and goes, the buy to let market will almost certainly slow down which we believe will influence house sales during the second quarter and beyond.

If forecasts are correct, there is good news for mortgage borrowers both new and old as bank interest rates are expected to remain at their current low level for the whole of the year and beyond. This is even taking into account the USA increasing their rates last month. Fixed rates are therefore expected to remain very competitive throughout the year.

So what does this all mean if your New Years Resolution is to own a home of your own or move up the property ladder? Should you buy now or wait to see what happens to house prices? Well, if home ownership is a long term view and it's affordable now , then why not? Especially as a mortgage repayment will most definitely be cheaper per month than the equivalent rent over the same period (based on a typical 25 year term mortgage). And if it's guarantees you're after, then long term fixed rates can help guarantee that too!

For advice on mortgages and other financial matters, Premier Financial Group can help answer your questions. simply email ask@pfgmail.co.uk

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