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Should We Rent Or Buy Our Home

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As a small boy growing up, my parents drummed into me the importance of investing in my own property whenever I was in a position to do so.

When I became older, left school and started my first job, their advice always stuck in my mind, even amidst the supposed doom and gloom of the housing market continually being reported throughout the media.

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I can’t honestly that I never had any doubts at certain stages of my life about continuing to push myself to afford my own home rather than rent it. At those times I questioned the courage of my convictions, but I always believed that history does determine the future and it often repeats itself.

Now using that format, I can see clearly that history shows property prices always ends up going in only one direction, even after major setbacks in the economy, and that way isn’t down!

The latest report from Nationwide shows that last month was the slowest increase for UK property prices for over a year. Month on month it only increased by 0.1 per cent.

These latest figures have called for some ‘experts’ predicting that property prices have hit their peak and will probably start to decline now.

In the past and even recently on a few occasions, I have looked at different reports from separate sources released on the same day offering varying opinions and forecasts about which direction the housing market will go. One will predict one way while the other will say the total opposite in stark contrast.

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Meanwhile, year on year UK prices currently stand around 11 per cent higher. The average price for a property in the UK is now £188,949 according to Nationwide.

The building society’s chief economist Robert Gardner was not surprised by last month’s slowdown as he points to new stricter mortgage guidelines introduced via the Mortgage Market Review.

Mr Gardner believes “ that the slowdown will prove temporary, though the underlying pace of demand remains unclear. With the labour market strengthening, mortgage rates expected to remain low and consumer confidence rising, activity is likely to recover in the months ahead.”

When the MMR first came into operation at the end of April, it was widely anticipated that it would deter many lenders from granting approvals on their home loan applications. Some potential borrowers were afraid of the unknown questions and criteria needed, so therefore decided to stick, rather than twist!

But there are now more positive and encouraging signs that lenders and borrowers alike are starting to get to grips with the new measures imposed.

However, mortgage brokers say that many lenders are still somewhat confused about the latest alterations that have been enforced upon them.

A couple of months after the MMR came into power, the Bank of England added extra criteria into the melting pot for mortgage applications changing the spec further on both sides of the process. This has now become an issue of concern as many lenders are still apparently uncertain on how far they need to go concerning affordability checks.

The major announcement made by BOE governor Mark Carney was that from this October, a lender may use no more than 15 per cent of their overall lending for borrowers wishing to take out loans greater than four and a half times their annual income.

Andrew Montlake, director of Coreco who are a London based mortgage broker thinks that the two contrasting sets of rules has made home loan borrowing somewhat of a shambles.

Mr Montlake, says “We are going from income multiples to affordability and then back to income multiples again.The problem is that all these changes from the regulators and lenders add up to mass confusion for the customer.”

However, the FCA do not see it the same way. The new city watchdog say: “The two policies are not inconsistent. Lenders must be assessing the affordability for each mortgage before they agree to make the loan. The LTI limits apply in aggregate so lenders should be considering the LTI threshold limit across all their lending rather than on an individual basis.”

For this particular author personally, even though it may be a struggle to buy my own place, whilst demand outstrips supply, especially in this current building situation across the country, I will endeavour to reach my goal as I believe that it will be ‘as safe as houses’.

About the author

David Griffin David Griffin trained as a graphic designer and now helps PaydayLoan123 with social media. He is a born and bred Londoner who has recently moved out of the capital and is probably missing it a little too much. He enjoys fishing, playing golf and working out at the gym, when he feels energetic enough!

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