You are putting our sales at risk
That’s the general tone of the messages that I have received this week, after posting a few videos warning people to prepare for the forthcoming turmoil in the property market. It seems that many agents are reassuring potential buyers with words of reassurance, in an effort to convince them to proceed with their purchase, even though many of them will not be able to afford their new mortgage, if the interest rates continue on their current trajectory. I on the other hand, have continued to warn people of the dangers of high interest rates, a falling market and the real and present danger of ‘Negative ‘Equity’
On the one hand, I have no intention of scaremongering people, but as the economy and the pound stand, anything could happen, I do not want people to lose their homes, and if that means that I have to point out the risks, the possible outcomes, of even convince people to re-think whether they should buy now, then so be it.
As it stands, I definitely believe that those who are buying a new property with a small deposit are most at risk, as these properties are always over-priced and as the market stands, they face the risk of entering ‘Negative Equity’ almost immediately, but should interest rates continue on their current course, by next year, the value of their house may have dropped so far below the balance of their mortgage that they will not be able to sell for years and if they cannot afford the payments, they will be in serious trouble.
I sincerely hope that the inflation and subsequently interest rates settle down, nobody can accurately predict where we will be by next year, even the Bank of England are not sure, we are in a very fluid situation, but on the balance of probability, interest rates are on target to exceed 6%+ and for the size of mortgages that people are now taking out, that is serious and they deserve to know the risks.
As a professional, I believe that I have a burden of responsibility, to help buyers make an informed decision, whatever happens to the market, there will still be people who want or need to sell, albeit at lower prices, but in the meantime, it is our job to ensure that we present the facts to everyone in a clear and unbiased manner, if that means that some people in the industry are upset, because they prefer not do do so, then that is their issue, I would not in good conscience, encourage anyone to proceed with a purchase in full knowledge that within a year, they may not afford it.
If my intention to tell people the truth causes waves, the so be it!