We are all acutely aware of the cost of living crisis – inflation rising, petrol and diesel prices hitting record highs, gas and electricity caps sky-rocketing. Yet, in all this melee, mortgage rates remain relatively low. But for how long?
If you were to try to fix your gas or electricity tariff, you will struggle or commit to a high price per kWH, but should you remortgage or mortgage and fix for 2, 5, 10 years?
As ever, we would recommend you taking independent financial advice, but the answer, we think at Sefftons, a leading Norwich estate agent, is nuanced: it depends. People on new developments used to move every 4 years on average, and other areas, without new builds, saw residency last an average 9 years. But, after the frenzy of the SDLT holiday, during the Covid 19 pandemic, habits have changed.
Simply put, families, couples and individuals are staying put for much longer – we read the average is now 17 years! Great news for builders and tradespeople perhaps but not so great for estate agents and property developers.
You may also notice another trend that has emerged with remote working – people no longer up sticks, and move across the country for jobs. Relocation has become a less common phenomenon. People instead are staying put, or downsizing, or upsizing locally – sometimes in the same postcode and even the same street.
With this reluctance to move every 4 or 9 years, it is worth considering a 5 or 10 year fix, because you will have peace of mind that your mortgage repayments will remain static (unlike gas or electric) and you can dent the capital, accrue equity and plan for a move in the future.
The other mortgage news we’ve spotted at Sefftons too is the scrapping of the mortgage affordability calculator – lenders have stopped using it and instead look instead at income, property price changes and mortgagee’s age when assessing risk.
Locally, we have seen a slight cooling of the property market – but, if a property is presented well, priced accurately by our team, using comparables and market knowledge, with proactive promotion on portals, social media and to our email database, they sell and sell quickly.
Conveyancing is currently straining still under volumes and backlogs but we have seen clients move within 8 weeks with proactive conveyancers, estate agents and sellers/buyers who are prepared to engage in the process.
So, should you fix your mortgage for 2, 5 or 10 years?
Depends on your circumstances – if you don’t want hefty exit fees and are confident you will remain in that home for 2, 5, 10 years, it could make sense.
Do seek professional financial advice though, before deciding.