Simon Read: How to avoid being caught out if the property bubble bursts

Such uncertainties have been a feature of the mortgage market for several years

The Bank of England’s base rate has never been lower and the new Governor, Mark Carney, has signalled that rates may not rise for three years.

Meanwhile, competition among mortgage lenders is getting more fierce, leaving average five-year fixed rates at 3.83 per cent, the lowest they’ve been for some time.

It’s no wonder more people are thinking about getting on the property ladder or taking advantage of the attractive headline rates to move home. Especially as the latest survey of estate agents from RICS, published today, shows that home prices grew last month at their fastest rate since the market peak of November 2006. That raises fears that if you don’t take advantage soon, the affordability of your dream home may yet again climb beyond your reach.

And there are many ways that – even if you don’t have enough of a deposit – potential borrowers can climb on to the property-owning bandwagon. But before you leap it’s worth heeding the warnings from some economists that a housing bubble looms. If the bubble bursts, as some predict, that shiny new home could prove a financial drain, especially if you’ve stretched your finances to buy it.

But such uncertainties have been a feature of the mortgage market for much of the past six or seven years. With that in mind, it’s wise to look to buy a home that you may be happy with for some years, rather than a property that you hope to sell at a profit in a year or two. If there is a bubble and consequent price deflation, you’re more likely to end up in negative equity, owing more than you borrowed and stuck with a property you can’t sell.

Given that, there are several ways for the short-of-cash to buy a home, not least through the Government’s Help to Buy scheme. It offers loans of up to 20 per cent of the value of a new-build property in England and will start part-guaranteeing mortgages across the UK from next year.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Graduate Recruitment Resourcer

    £20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

    Recruitment Genius: Telesales Executive - OTE £32,000+

    £18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

    Ashdown Group: Marketing Manager - B2B, Corporate - City, London

    £45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Neil Pavier: Commercial Analyst

    £50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

    Day In a Page

    General Election 2015: The masterminds behind the scenes

    The masterminds behind the election

    How do you get your party leader to embrace a message and then stick to it? By employing these people
    Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

    Machine Gun America

    The amusement park where teenagers go to shoot a huge range of automatic weapons
    The ethics of pet food: Why are we are so selective in how we show animals our love?

    The ethics of pet food

    Why are we are so selective in how we show animals our love?
    How Tansy Davies turned 9/11 into her opera 'Between Worlds'

    How a composer turned 9/11 into her opera 'Between Worlds'

    Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
    11 best bedside tables

    11 best bedside tables

    It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
    Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

    Italy vs England player ratings

    Did Townsend's goal see him beat Kane and Rooney to top marks?
    Danny Higginbotham: An underdog's tale of making the most of it

    An underdog's tale of making the most of it

    Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
    Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

    Steve Bunce: Inside Boxing

    Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat