Are Home Buyers More Cautious or is There More to the Data than Fear of Brexit
The latest data on mortgage approvals revealed that lenders approved fewer mortgages in the six months running to March. The Bank of England (BoE) reported only 66,837 approvals for house purchases which was the lowest level since September 2016. This level of mortgage lending is less than what had been forecasted by economists, and it is due noting that the value of mortgage lending fell short of expectations as well.
The BoE data could be an indication that home buyers have become more cautious because of the unknowns that remain with Brexit. Consumers are facing rising inflation and slowed wage and job growth.
There could be more to the data than what looks obvious on the surface.
Consumers could have grown accustomed to low interest rates and therefore they don’t feel an urgency to get a remortgage while rates are historically low. Without the threat of pressure on a household budget in the near future, consumers could feel comfortable and believe that their comfort zone will always include the option of low interest rates. This viewpoint is totally wrong and could lead many to face rising interest rates at a time when lending tightens and find they missed the opportunity to lock in the best rate for saving money.
Hopeful home buyers may have become disillusioned with the process of buying. Shopping around for the perfect house only to face out of reach house prices could push home buyers to accept a reality of renting for life. Many may be unaware of possibilities that exist in new schemes and options including the upcoming naked house project in which homes will be available for purchase with necessary plumbing and electricity, but partition walls and cosmetic parts of the house left to the buyer to complete. This makes the cost of building as well as buying a home more affordable and puts many buyers back into reach of home ownership.
Millennials are focused on the sharing economy and life experiences more than gathering assets. This important demographic could be stepping back from homeownership and be looking toward a more fluid lifestyle in which they can more easily choose to move to areas that offer them new options in community opportunities or jobs.
The data on the housing market can quickly be interpreted in relation to current domestic and global events, but perhaps some of the shift in consumer behaviour is more personal and shared by a larger population than perceived.
Those underlying possibilities are what make an economic outlook so unsure, and that is why hopeful home buyers looking to gain a mortgage or homeowners looking to remortgage might want to focus on the current opportunities available to them. If the interest rates look great, deals are attractive, and lenders are willing to look at all applicants individually rather than as a whole, then maybe today is the time to look seriously at home ownership or a new interest rate with a remortgage. After all, if it looks like a duck, quacks like a duck, and walks like a duck, then it might just be a duck, meaning maybe the time is exactly right for some even if others don’t see the opportunities in front of them.