Welcome to our 12th September Auction Sale
This month it is 35 years since I joined Barnard Marcus Auctions and since that August of 1989, I have seen huge changes to our industry and the market in general. When I joined the firm, the average UK house price was £60,701, today it is £280,000 and whilst we all have an eye on interest rates today, the Bank of England (BoE) base rate was 13.84% and it very quickly rose to almost 15% by October 1989.
One of the big differences from that time compared to today is how the UK mortgage market offers their lending. Until very recently, the mortgage market tracked the BoE and offered customers a rate marginally above the BoE rate, as the base rate increased so did the High Street lending rates and vice versa, although, it was noticeable the High Street lending rates went up almost immediately the base rate increased yet when it decreased, High Street mortgage rates were much slower to come down and very rarely by the same margin / basis points.
Today, the market is very different for customers wanting to borrow to acquire property. Of course, back in 1989 the Buy-to-let market was non existent as far as the public were concerned so lenders didn’t have that product on offer also, there were far fewer lenders, so less competition for them resulting in less competitive deals available for borrowers. The market is now swamped with lenders vying for business and this is demonstrated by the deals available today.
The BoE base rate today is 5% and will hopefully drop a little further but the huge difference now compared to almost any time over the last 35 years is that lenders now offer mortgage products at lower than the BoE base rate. A quick check on Google reveals that towards the end of August borrowers with a 10% deposit could fix their interest rate at 4.68%, for those with a 25% deposit the rate dropped to below 4% and, for buy-to-let investors with a similar deposit the rate was as low as 3.49%.
Such competitive rates point to two things in my view: first that the mortgage market is highly competitive and lenders are doing everything they can to attract your business, the second, and this is pure speculation, the lending markets are expecting further reductions in the base rate and are already pricing this into the deals on offer today, maybe it’s a combination of the two!
So, although house prices were far lower 35 years ago, the pro rata cost of borrowing today is about 1/3rd of what it was then but of course, when looking at the overall cost we must factor in house price growth. Over the period of Covid and beyond we became used to ultra-low interest rates which we will most likely never see again, we all knew they were unsustainable and wouldn’t last forever. Today we appear to be in a less volatile interest rate environment and whilst of course there are other economic pressures it does appear an opportune moment to buy.
Consider, over the last 35 years the average house price has grown by some 460%, if the same happens over the next 35 years and I am around to write this article in 2059 will I be referring to average house prices at some £1.5 Million or more? Who knows!
What I do know is that this 350 lot catalogue is packed full of fantastic opportunities for far less than that (and a few over £1.5M) so, please enjoy it, if you have any questions contact my teams throughout our various centres in the lead up to the auction and, we look forward to seeing you on the day.
Wishing you the best of luck with your bidding!
