The number of newly-listed homes for sale is on track to be the highest in a decade according to property platform Zoopla’s latest House Price Index.
First-time buyers in particular are benefiting from the wide choice of homes available, the site says, with 40% of properties now cheaper to buy than rent thanks to falling mortgage rates, up from 25% a year ago. This assumes a 20% deposit.
Richard Donnell, executive director at Zoopla, said: “Lower mortgage rates and improved affordability of mortgages mean now could very well be the best time to buy a home in recent years, especially for first time buyers with more homes available to buy for less than the cost of renting.”
House price growth remains slow, with prices up just 1.3% over last 12 months to the end of January. Rising supply is expected to keep prices in check. There are currently 6% more homes for sale than a year ago, and this is likely to increase incoming months, with spring one of the most popular times of the year for properties to be marketed.
Mr Donnell said: “Despite improved levels of market activity, subdued house price inflation is good news for buyers and sellers and represents a more stable market. More sellers putting their home on the market shows a strong desire to move home.”
Average mortgage rates dip below 4%
Average mortgage rates for new loans are at their lowest level for four years, according to Zoopla, with rates on both two-year and five-year fixed deals are now below 4% for the first time since 2022. However, mortgage rates remain well above the ultra-low levels seen in 2021.
Easing mortgage rates in recent months are due to lower base rates and increased competition between lenders. Many lenders have also relaxed their affordability criteria, with borrowers typically having to prove they can afford a higher mortgage rate of 6.5%, down from 8.5% a year ago.
The bigger a deposit borrowers can afford to save the wider the range of competitive mortgage deals they’ll usually be able to access. Bear in mind, however, that it’s important to weigh up the overall cost of any deal that’s in the running, including any arrangement fees, rather than focusing on low headline rates alone.
