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Conflicting property market data

Conflicting property market data Rose Capital Partners

There was a huge amount of relevant property market data released last week, so we’ll dive straight into that (which is good, as I have no time to focus on my hair, which is about a week away from needing an Alice band…):

Inflation

The ONS (Office for National Statistics) released figures on Wednesday which showed that inflation (as measured by CPI) had fallen to 0.5% (from 0.8% in April) mainly due to record falls in fuel prices. As shops reopen as well, large discounts are expected to get shoppers shopping again. So this is all very logical and in line with what we would expect to see. In ‘normal’ times there would be a good argument to lower interest rates, but we are in anything but normal times.

Rental Costs

On the same day the ONS also published figures that had shown rental prices to have increased by 1.5% in the 12 months to May 2020. (that was in England, Wales was up 1.2% and Scotland up 0.6%). Again, logical, as house purchases decrease, rental transactions increase hence upping demand and prices. Maybe a good time to explore buying a rental property?

Mortgage Products Decrease

Despite 7 straight weeks of an increase in mortgage products being available, last week saw the first decrease since April. That was largely in the 90% LTV bracket as we discussed last week. As there is a lower level of transactions in this area, and lenders are closely managing their risk for obvious reasons, again, this is no surprise and not something of wider concern.

Drop in house prices?

Savills think so. On Thursday, they released a property market data report saying that they expected a 7.5% fall in 2020. However, they do still expect prices to rise by 15.1% by the end of 2024. It was quite a detailed report and worth a read if you have time, which you can do here. Which yet again bolsters the view that this downturn is temporary, and by that, a year or two at worst, with a notable upturn thereafter. Usual risk warnings on a 2nd Wave, Brexit etc… Plain sailing then…

Choppy Water

What this conflicting property market data shows is classic ‘choppy water’ in such a time of upheaval. You could look at these stats and decide the best thing to do, is do nothing. Or you could spot opportunities. The Savills report is useful for that, as if prices do dip now, but then hold up (as the long term issues of us not building enough homes hasn’t gone away) in the long term, rates stay very low as predicted (see below), now could be an ideal time to do that ‘big move’, spend some money on your property, get on the market, or simply fix into the current low rates. Whichever way you look at it, I feel there are great opportunities to be hand in the mortgage/property markets, so don’t miss out on this chance if you can avoid it!

Market update 22.6.20 Rose Capital Partners

Rate Corner

Money markets all nudged down vs last weeks figures.
So on that basis, it is not looking likely we will see more than one base rate rise in the next 5 years as that is what is currently predicted. However, I feel that is an overly pessimistic view based on people’s opinions right now, so we may well see more than that. It does look clear that rates are staying very low, for a very long time.

In the last week:
3 Month Sterling Libor = down by 0.039% to 0.158%
2 Year SWAP = down by 0.060% to 0.201%
5 Year SWAP = up by 0.054% to 0.253%

Best Rates:

2 Year Variable from 1.05%
2 Year Fixed Rates from 1.14%
5 Year Fixed Rates from 1.35%
BTL Rates from 1.19%
The actual rate you will be offered will be dependent on your personal circumstance and deposit level. Please speak to one of our advisers so that they can guide you through this process
Source: Twenty7Tec June 2020

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