Cheap mortgage borrowing rates is an even greater incentive to now look at potentially buying property in London.
Fresh research by Moneyfacts.co.uk shows that mortgage borrowing costs – both fixed and tracker-rates – have fallen to their lowest level in 23 years, which suddenly makes the idea of buying property in London considerably more attractive.
A shortage of homes in London has been pushing prices higher in recent months, but cheap mortgage rates mean that more homebuyers, including first time buyers, can now make that leap into new homeownership - an exciting but often financially difficult step.
With very few signs that interest rates will increase in the short-term, lenders have been competing for new business by steadily lowering their mortgage borrowing rates.
According to the research, two-year fixed rate mortgages now average 4.32 per cent, rising to 4.92 per cent for a three-year fix, with a five-year fixed rate at 5.29 per cent. A two-year tracker mortgage now averages 3.37 per cent.
"Earlier this year the market expected a rise in bank base rate that saw mortgage rates start to rise," said Michelle Slade, spokeswoman for Moneyfacts.co.uk. "An imminent rise in bank base rate now appears unlikely and the cost of funding on the swap rate market has reduced."
She added: "Lenders appear to be applying cuts equally across all LTV [loan to value] tiers, which is good news for first-time buyers, as previously cuts were only being applied to the lower LTV bands."
Wherever you are looking to buy property, whether it is property in Earl's Court, Kensal Green, Stockwell or even property in Putney, it appears that competition from other prospective homebuyers, including investors, is growing.
With a number of would-be purchasers being forced into rental accommodation instead of buying, rental values are rising. Consequently, many investors are adding to demand by purchasing homes across the capital, from property in Notting Hill to property in Maida Vale, in a bid to take advantage of soaring tenant demand.
The latest monthly residential property survey from Hometrack confirms that property searches are indeed improving. The number of home sales agreed by estate agents in May had risen to 10.6 per cent, the highest since 12.6 per cent in March.
Richard Donnell, Director of Research at Hometrack, said: "The first six months of 2011 have seen the housing market holding up better than many had expected. Low transaction volumes, low mortgage rates and forbearance by lenders limiting the number of forced sales have all played their part."
It is unsurprising that more people are looking for property for sale in London. Aside from being a home in which to reside, property also remains one of the best investments, offering high returns.
Source: Marsh & Parsons – Property for Sale in Kensal Green, Stockwell, Earl's Court
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