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Dundee mortgage expert shares advice to home owners amid soaring interest rates

Kessar Salimi, Dundee mortgage adviser and property investor. Image: Kessar Salimi
Kessar Salimi, Dundee mortgage adviser and property investor. Image: Kessar Salimi

A Dundee expert has shared advice as mortgage rates have increased by up to 6% following the Government’s mini-budget.

The turmoil following Chancellor Kwasi Kwarteng’s package of tax cuts at the end of last month has sent the cost of borrowing money soaring.

It has led to fears that property prices could fall by as much as 20%.

‘Significant’ rise in cost of mortgages

Dundee mortgage adviser Kessar Salimi said lenders have already reduced the maximum loan offered to buyers due to the increased cost of living.

He estimates mortgages rates are now up by three to four percent compared to before the mini-budget.

Mr Salimi says the higher interest rates mean homeowners could struggle to pay their mortgages.

“Especially those who are already stretched financially with the cost of living crisis,” he says.

“If their current product is due to finish soon, they will likely see a significant increase in their repayments.”

While reports claimed more than 40% of mortgage deals were withdrawn after the mini-budget, the mortgage adviser says there is still good availability.

He says: “There has been a lot of talk of deals being withdrawn, but it’s definitely not my experience and that of fellow brokers I know.”

What will the impact be on Dundee, Perth, Angus and Fife property market?

In the short-term, there will be some hesitation in the property market says RSB Lindsays Dundee partner Chris Todd.

Chris Todd, partner at RSB Lindsays in Dundee.
Chris Todd, partner at RSB Lindsays in Dundee.

As lenders are still assessing their positions, it’s too soon to say what might happen in the long term.

Mr Todd says: “Every local housing market is different and Tayside is no exception.

“It’s possible we might see a slight drop in property prices, or at least people not being prepared to bid as much above the home report valuation as they have been in recent times.

“The other side to that scenario is that people would be borrowing less, albeit at a higher rate.

“Lenders are nervous because they are unsure about how to price their products. They will work that out as things calm down.”

Estate agent Thorntons said the local housing market is still doing well, with a number of properties selling for above home report value.

Yvonne O'Connor, Thorntons properties operations manager.
Yvonne O’Connor, Thorntons properties operations manager. Image: Thorntons Estate Agency

However, operations manager Yvonne O’Connor has seen the amount buyers are offering has reduced.

“It’s still too early to tell if the recent increase in mortgage rates will lead to a house price fall, however in the short term it is unlikely due to the number of buyers still in the market,” she says.

Mortgage advice for owners and buyers

Mr Salimi said first time buyers might re-assess how much they can afford and buy a smaller property than they would have previously.

He said: “There are however still products available for first time buyers with a small deposit.”

He also has tips for both first time buyers and home owners.

“Buyers, have a chat with your mortgage adviser before bidding on a property to see what your eligibility is and what your repayments are likely to be so you can budget accordingly,” he says.

“People with mortgages, have a look at when your current deal is expiring and look to review your options seven months before.

“Many lenders provide mortgage offers which last six months and lock in the rate at the time of applying.”

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