The past few years have seen an unexpected boom in the property market. Thanks largely to lower stamp duty, tax breaks and record low interest rates in many countries. What is happening with the property market in 2022, and is this a good year to buy?
Predictions for 2022
So far, 2022 has seen low housing inventory and increased prices, which has driven house prices up. The median house price increased by 15% in February, and interest rates have also jumped up, with the average interest rate in the USA for a 30 year fixed mortgage jumping from 2.65% to 3.85% in the first three months of 2022. In the United Kingdom, where the average house price rose by 9.6% by January 2022, and the central bank has raised interest rates to 0.75%, the most significant increase in the past two years.
With increased interest rates and rising inflation worldwide, this supply and demand imbalance of the past two years is predicted to cool off a bit. This change is not necessarily bad news, just a return to a more stable situation after the unusual and unique housing market we have seen in the past two years.
How to get on the property ladder?
Now is potentially the ideal time to get on the property ladder. The first set is to secure a mortgage pre-approval. A mortgage, in principle, is a document provided by a mortgage adviser that gives you a general idea of how much you can lend for your home loan. A mortgage broker like Trussle can check your credit history and eligibility with 18 different lenders and give you an accurate figure of how much you can borrow. A mortgage, in principle, is a more precise estimation than an online mortgage calculator, as it takes into account your earnings and outgoings but is not a guarantee that you will be approved for a mortgage.
Once you understand how much you can borrow, you can then budget and start saving for your required deposit or down payment. The bigger the deposit you have, the easier it will be to get approved for a mortgage and the more options you will have. Patience is essential, especially for first-time buyers, as it will take time not just time to budget and save but also to search and find the right property. Start improving your spending habits and get prepared. Try using a budgeting tool like Mint to help you get started. With a budgeting tool you can start tracking your spending and also your credit score. If you are feeling a little overwhelmed with where to start, a good starting point is to complete a credit check and get a report. You can run a credit check online for free very easily with Clear Score. Once you see what debts or potential obstacles you have, you can begin by paying off the highest interest on credit cards or other debts. Increasing your credit score is essential if you are looking into applying for a mortgage.
Table of Contents