Home buyers to take note
The Monetary Policy Committee (MPC) has treated consumers kindly, announcing an interest rate cut in March this year and keeping levels unchanged. However, experts predict a 25 basis points increase to be in the cards, if not this year, then next year for sure. This is the meaning of property guru, Adrian Goslett in BIZProperty.
He is advising consumers not to take the current 10% prime lending rate for granted. However, according to Goslett, there will be an eventual correction and the opportunity to make a profit during these trying times doubles for those who work smartly with their investments, buying while house price growth is low or stagnant and selling when prices begin to climb.”
What is somewhat more disconcerting than our current economic outlook is the growing number of first-time buyers who are purchasing property on a 100% bond. This grew by 5.1% from 42.6% to 47.7% year-on-year (most of these loans went to buyers in the affordable sector). The average deposit paid by first-time buyers (during the 12-month period ending September 2018) was 10.42% of the purchase price, compared to 11.57% in the previous 12-month period.
Understandably, it is not easy for buyers to save up towards a deposit in addition to the legal and bond registration fees payable on conclusion of the sale. However, bonds granted to buyers with low or non-existent deposits will attract higher interest rates which will end up costing those buyers more on their monthly installments and on the total amount of interest paid on the property by the end of the loan term.
(Edited for style and length.)