Second steppers ‘may get poor deal in current market’ - claim

A financial analyst has suggested homeowners may be better off staying put in the current market.

CMC Markets has predicted a likely slowdown in house prices, which it said could be positive for those waiting longer to purchase a home.

But Michael Hewson, chief market analyst at CMC Markets, said rising interest rates, more expensive mortgages and the cost of living crisis will all weigh on demand.

He suggests buyers should prepare for more expensive mortgages while sellers may have to think twice about listing their homes as they could get a poorer deal.

Hewson said: “Most buyers are weathering the storm for a few more months at least, while some are also working out how the cost of living crisis will pan out in the medium term so that the new mortgage is not squeezing their pockets beyond their comfort zone.

“For those still keen to get on the property ladder, there are plenty of fixed-rate banking products that can insulate them from the current spiralling interest rates on mortgages. 

“They should, however, prepare for the possibility of being faced with higher-than-expected repayments once the fixed rate period expires, as the new variable rates are at the lender’s discretion. Fixed rates are not a cure-all either, as they may now be set to a higher level to start with.

“The buy-to-let market is equally volatile. Landlords will either pass the increased mortgage repayments onto tenants by increasing their rent or simply sell fast to lock in a better price. 

“Right now though, those already on the property ladder are generally better off staying put rather than moving or re-mortgaging. They would not get a good deal on their old house in this market and may likely end up losing more money overall.”

Hewson also provided a gloomy economic outlook, adding: “The UK currently fares worse than both the EU and the US. This is due to its closer dependence on energy shocks than the States and less government intervention to soften the blow compared to its European counterparts.”