House prices have remained elevated after the buying boom created by the pandemic. There was a need for more space to accommodate lockdowns while working and studying from home. However, the major factor behind the buying frenzy was the low cost of borrowing. The Bank of England’s Monetary Policy Committee (MPC) had lowered the standard base interest rate to almost zero at 0.1%. Lenders then offered their own historical low rates. Borrowing was so cheap it offered an open door to those that had been struggling to get onto the property ladder and in homes that would have had to wait for an upgrade rather than as a first-time home buyer’s property. Sadly, those interest rates are long gone and now an old trend is back helping renters abandon high fees and buy their first home.

A strong and healthy housing market is important. The housing market is a vital part of the country’s economy. It is of course important to buyers, sellers hoping to upgrade or downsize, and all of those businesses that are related in some way either fully or partially to buying a home or moving home. It is also important to homeowners. The strength of the housing market will impact whether a homeowner has made a significant choice in their purchase investment. As property values increase due to strong buyer demand, a homeowner will find their loan to value, or LTV ratio, is impacted positively. A lower LTV ratio is looked at as a favorable factor in the remortgage process and could bring about lower interest rate offers.

As interest rates have been on the decline due to the MPC cutting the base rate twice this year, and inflation dropping below the target of 2.0% to 1.7%, buyers have shown stronger demand. This has brought about an increase in properties coming onto the market. More supply, lower interest rates, and confidence that the economy is headed out of a slump can motivate buyers to enter the market.

However, there has been concern that the elevated house prices are closing first time buyers out of the market. Even with lower interest rates, there is the possibility that rates could climb at sometime in the future and home buyers must consider if they could afford a home now as well as in the years to come if interest rates should rise.

In 2020, the base rate was cut to 0.1% and began to rise in December 2021. In January 2022, the base rate was 0.25%, by January 2024 the rate had climbed to 5.25%. No matter how affordable a home is when it is purchased, the rates will always fluctuate and homeowners coming to the end of their mortgage deal can remortgage or risk being transitioned to a lender’s standard variable rate (SVR) and pay even more. Sometimes a SVR is double or more the interest rates found in remortgage deals. For all mortgage terms come to an end, and when the expiration comes a homeowner must say goodbye either gladly or sadly to the past rate and choose a new one or have one put upon them with a SVR.

To level out the affordability factor and increase the odds of finding a home they can purchase, renters have turned to the trend of buying a home in need of some tender loving care. There is a rapid rise in the home do it yourself or DIY culture. One has simply to look at YouTube or social media to find inspiration, how to guides, and advice from others going through the same process.

By choosing a home in need of repair and improvements, a home buyer is finding the purchase price is much more affordable. Being smart, they are taking their time in purchasing and understanding the needs of the home and the costs involved in renovations even if the labor is their own contribution. 

According to Rightmove, in a consumer survey of over 34,000 home movers, 69% of home buyers that were once renters were intended DIY home fixers and 54% of homeowners purchasing were taking on a DIY project home. 

Homes in need of renovation were cheaper with a 12% average discount. The current average house price is £371,858 and the average DIY project purchase home is 12% or £44,634 lower at £327,224. Of course this is an average, with homes being higher or lower depending on the location, renovation needs, and size of the home. 

While some buyers might see this as a limitation or hardship to endure in the buying process, 73% of renters revealed it was a positive opportunity to turn the house into exactly what they desire or to create their dream home. Others surveyed admitted to wanting to increase their home renovation skills and knowledge and others wanted to increase the value of their home by doing the renovations they deemed most important such as energy efficiency. 

There are also those seeking a home in which they could connect on a more personal and emotional level by preserving its historic character and charm.

Tim Bannister, property expert with Rightmove, remarked, “Tackling a renovation project could be a more affordable way to get on the ladder and to make a space your own.

“While they do require time and planning, many find the process worthwhile, as it can offer both financial benefits and the satisfaction of creating a home that truly fits their needs.”