How to buy a cheap home in the UK without paying a deposit or mortgage is no longer possible.
The UK’s last major car buying spree has ended, and it’s not just because of the Brexit vote.
A number of factors are driving this down the road.
The key to this was a change in the way people were buying homes.
In 2017, the number of people who said they bought a home to “buy, sell and invest” was higher than it was in 2015, according to data from the National Insurance Institute (NI).
That’s because, as people’s disposable incomes dropped in the wake of the financial crisis, and housing prices have been rising faster than wages over the past two decades, more people are relying on mortgages.
The problem is that these loans are still extremely cheap.
“The amount of money you can put down as a deposit, or mortgage, is far lower than it used to be,” says Ben Wills, the director of UK Property Investors.
The best way to get an investment property is to buy one through an agency, which charges a fixed interest rate, Wills explains.
“You could have your first mortgage, and then you could pay off your first loan in five years, but then your interest rate will increase every time you buy another property.
The same thing happens when you buy a home.”
The big question is, what will happen to this high-interest mortgage rate once the Brexit referendum takes place?
The answer is that the UK government will no longer have a direct role in mortgage rates, but will instead work with lenders to find ways to lower the interest rate.
This is likely to mean the end of the mortgage deduction, which, at least at first, will make it easier for some people to pay off their mortgages.
And that’s not necessarily good news for the millions of people looking to buy property.
“There is a chance the UK could be in a period of very high interest rates for many years to come,” says John Smith, senior research economist at Credit Suisse.
“A lot of the properties being sold to investors and families right now are very attractive, but we are not there yet.”
There are also risks for homeowners.
“We’re probably in a very different market now,” says Smith.
“It’s going to be more expensive, and there’s a higher chance of being hit by a housing crisis.
People are being pushed to the edge, and people will be looking to sell their properties for more money.
That’s going be a very volatile market.”
What will happen when people can no longer buy homes?
The UK will likely remain a housing market dominated by older people.
In addition, it’s possible that interest rates will continue to rise.
There’s also the issue of how this all impacts on housing affordability.
“If you’ve got a big property in London or the capital, you’ve been able to afford to keep it,” says Wills.
“But if you’ve had to move out to a bigger house, and are trying to sell, you’ll need to find a new place to live.
That means you’ll probably need to make more sacrifices.”
What’s the cost of a house?
The key takeaway is that, as interest rates rise, it could become more expensive to own a house in the future, especially in poorer areas of the country.
“As we get further out from the current trend, we will see more and more people going into these high-rise areas and buying properties, but the price of that house is going to go up in line with the rate of interest,” says Nils Gertner, head of investment at Investec.
“So you will be paying more for the same property.”
That could mean you’re paying more in rent.
“That means that the price you’re putting down on your mortgage, which is now more expensive than your interest payment, is going up.
So you will end up paying more rent,” says Gertener.
This will have a knock-on effect on your home prices, too.
“People are going to look for places to live and there will be higher demand for properties,” says Chris Whitehead, managing director of property comparison website RealtyTrac.
“They will need to think about whether they want to pay more for their property.”
There’s no doubt that, if things continue at the current pace, a property that was worth £250,000 a year will now cost £350,000.
This could lead to a big drop in the value of a property.
But what will be left for the owner to sell?
The biggest question is how the Brexit change will affect those people who already own a home and want to sell it.
“For people who have been renting for a long time, it may be difficult to sell a property,” says Whitehead.
“Many people are now looking to rent, and they will be much