In a game of chess, players make strategic moves in response to those made by their opponents. Much like this, lenders carefully calculate their plans to encourage buyers back to the property market. With renewed confidence following the Bank of England’s lesser base rate increase, all major lenders are easing their mortgage rates. They are aiming to get more buyers into winning positions by making it more affordable to purchase homes.
The strategic reduction of rates
Lenders, just like chess players, plan their moves ahead. As we have already seen several rises by the Bank of England this year, lenders have likely anticipated this latest move. By doing so, they may have factored the most recent rise into the current mortgage products they are offering. This makes imminent increases unlikely, as they commit to loan rates over several years. This strategy is a positive one for the property market, making it more appealing for prospective buyers to take out mortgages.
First-time buyers join the board
As more landlords continue to exit the market, affordable properties are becoming available. The move made by lenders to improve the rates they are offering is enticing first-time buyers back to the market. Although there is competition from buyers looking to downsize to improve their existing mortgage costs, the activity at this end of the market is visible. As new players join the board, existing ones can plan their strategies for taking their next steps on the property ladder.
Keeping house prices in check
House prices are a popular topic for speculation in the media, with several articles published following the Bank of England’s announcement. Whilst prices are going down, the average difference is minor in most areas. As the property market continues to show its resilience, bringing buyers back to the market could stabilise the decrease we are currently seeing. When buyer activity is low, house prices go down in turn, but when competition amongst buyers is high, prices shoot up. Although we may be seeing house prices decreasing slightly, the positive steps made by lenders to encourage buyers back could see them increase again.
Checkmate for buyers
The current tactics in play are having a positive effect on the market. As we await the Bank of England’s next turn, lenders are showing their optimism as they reduce their rates. Despite the economic uncertainty, the property market remains active. The move by lenders is a positive sign of the potential stability to come, whilst enabling more buyers to reach checkmate and move into their new homes!
Home Legal Direct’s COO, Oliver Meddick, explains: The chess game has been playing out since the increase in June. Now, if the base rate holds, it will be interesting to see how this will fuel lenders’ confidence and what influence this will have on the range of products that become available. There is still plenty of activity in the market, which is a sign of positive changes to come. Let us remain optimistic as we await the next turn in the chess game.