House Sellers Hope for More Buyers with Low Interest Rates on Mortgages Available
House sellers are becoming more optimistic in finding a buyer and that was reflected in their asking prices this month. According to Rightmove, the average asking price from house sellers increased by more than £8,000 for October. This is the largest increase in asking prices in eight months and is 1.5% higher than last year. The average increased by 3.5% when compared to September and amounted to an overall average asking price of £243,168.
There is an expectation that there will be more demand from buyers as lenders drop the interest rate on their mortgage loans. The new Funding for Lending scheme from the government has helped lenders offer mortgage loans at historically low interest rate levels. At 30-40% loan to value levels home buyers can choose from fixed rate deals at below 3%. Those with lower deposits have slightly higher interest rate choices but those often are fee free or have lower fees. There are also numerous mortgage loans with free valuation and/or free legal work attached. In August the Council of Mortgage Lenders revealed an increase of home buyers with a two year high in numbers.
London still has strong demand from foreign investors. Home sellers in that area increased their asking prices by 4.8% to an average of £478,071.
Rightmove director Miles Shipside noted that the lower number of properties coming to the market likely contributed to the increase in asking prices.
He noted, “Sellers need to be mindful that the window of opportunity to sell before the traditional winter slowdown is a narrow one, and they risk being left out in the cold for months until the spring market thaw.
“In addition, estate agents are reporting that mortgages are still no easier to obtain, with risk-averse lenders nit-picking every detail of the mortgage application paperwork, even from buyers who seem squeaky clean.”
A boost to the housing market would help increase house prices and therefore property values. Homeowners hoping to remortgage have a difficult time when their equity levels are low and many are still battling with negative equity.