How Does Rising Inflation Impact My Property Search?

As governments try to keep inflation under control, the price of virtually everything is increasing, including groceries, fuel, rental prices, and interest. Rising inflation has inevitably also impacted mortgage rates, rising to around 5% in 2022 already. If you are searching for a home, you may be wondering exactly how these changes will affect your property search.

Secure Pre-Approval

With low inventory and increased demand, house prices have increased over the past few years, creating a sellers’ market that is highly competitive. According to a recent housing report by RE/MAX, sales are still happening so fast that demand is still outpacing supply. Along with this, home buyers are facing increased mortgage rates, which hikes in interest rates driven up due to rising inflation. 

Although things are changing rapidly, it is not necessarily a reason to panic or give up on your property search, but rather a time to evaluate your situation and finances. As long as you are in the right financial position and secure employment, there is no reason why you can’t buy a home despite rising inflation. An important first step is to secure pre-approval. It will give you a leg up on the competition in such a hot market and could potentially help you secure a mortgage rate before they climb any higher.

It’s important to get expert mortgage advice, especially if you are a first-time home buyer and considering the unique and changeable property market. Brokers, such as Trussle, offer mortgage advice and negotiate with multiple lenders on your behalf to secure the best possible interest rates available. You can also secure a mortgage in principle which will be valid for up to 90 days. The positive side is that experts are predicting that the rise in rates will have a knock-on effect of slowing down the highly competitive housing market.

Improve Credit & Budget

Your debt to income ratio is one of the first and most important things that a financial body will look at when considering your suitability for a home loan. One of the positives of rising interest rates is that high yield savings accounts have also increased rates, giving you the potential to save a little more for your down payment when you find your dream home. Complete an up-to-date credit check with ClearScore or Experian. 

Generally, you will need a credit score of around 620 to qualify for a home loan. Paying off debts and credit cards is always important, but especially in times of rising interest rates and inflation, it is vital to keep on top of your credit score.

If you have been planning to buy a house for a while, you most likely have a comprehensive budget. Now is a good time to review your budget, taking into account increased prices due to inflation. Everything from food, fuel, clothing, and travel has been impacted, so you need to adjust your monthly expenses to reflect this and consider where you can make potential cutbacks or changes to compensate.