Homebuyers are being advised to increase their deposit in order to avoid negative equity amid reports of falling house prices.
According to Nationwide, the average UK house price has fallen to £257,406, down 1.1%, which is the biggest annual decrease since June 2020.
Money.co.uk mortgage experts are urging buyers to put down a larger deposit in order to ease the risk of negative equity, which occurs when a home is worth less than the amount owed to the mortgage lender.
Money.co.uk’s mortgages expert Claire Flynn said that buyers should consider whether now is a good time to snap up a deal or wait for prices to drop further.
While there are predictions that house prices will continue to fall in 2023, some experts believe that the property market is stabilising following the impact of the mini-budget, with Halifax recently reporting a 1.1% month-on-month average price increase in February.
Flynn suggested that sellers who are concerned about future price drops should consider putting their property on the market now, but admitted that this may not be practical for homeowners.
Buyers who want to purchase now should put down a larger deposit to avoid negative equity, as the best mortgage rates are usually reserved for those who put down 40% or more of the purchase price.
However, even a 25% deposit can give buyers access to better deals than a smaller deposit.
Ultimately, whether now is the right time to buy or sell depends on individual circumstances, and buyers should do their research to find out what’s happening in the area they want to buy in.
