There is a lot of fear at the moment.

You can’t even turn the TV on without hearing the word “recession” uttered. But are these fears unfounded? Should you be worried about a recession, and what does one even mean for you?

Well, worry not. We are here to help you with all these niggling questions We are here to put your mind at ease about the three fears currently spinning around the media: a recession, negative equity and high interest rates.

Negative Equity- A Negative Thought

We can always look at the past to get an idea of the future. Many people are looking back to “Black Monday” in 1990 when many properties went into negative equity. Negative equity is what happens when the value of a property drops below the value of its mortgage.

For example, let’s say you buy a house for £200,000 and get a mortgage of £180,000 after putting a 10% deposit down. Suddenly, the housing market crashes, and your property is worth £170,000. You’re now in negative equity because your home is worth less than your mortgage.

So, is another Black Monday on the horizon? The answer is “Not likely”. House prices have skyrocketed over the past two years, and the high demand for property in the UK (alongside the banking system) has been cropping them up. After the crash of 2008, banks are doing everything they can to keep the market afloat. The property market is the backbone of the UK economy, so the government won’t let it crash.

How Will the Fear of Negative Equity Affect You?

Some lenders are getting nervous. It’s hard not to with all the fear currently being spread. If your mortgage provider fears negative equity, then they might raise their LTVs (Loan-to-Values). This means you’ll have to put a higher deposit down.

A higher deposit will account for any drop in value. So, other than saving more money before moving, you’re safe to buy. Remember, property prices always go up over the long term. So if you’re looking for somewhere to live for the next 5-10 years, any drop in value should even itself out eventually.

Will a Recession Hit?

We are already in a recession. The real question is “Will we be hit by a BIG recession?” It’s important to remember that banks do not want this. Everyone from the top down is trying to prevent the economy from seeing another crash, like the one we faced in 2008.

We expect interest rates to settle in the New Year, but this will be reflected in the choices The Bank of England make. They’re currently lowering the base rate to account for these high interest rates. Again, The Bank of England will do anything it can to avoid this recession worsening, so the decisions they make are designed to have a positive effect.

Moving With Certainty

There are no doubts we are living in uncertain times. Uncertainty is the new normal. After all, who could have predicted a pandemic, a war, and an energy crisis?  However, the term “as safe as houses” didn’t come from nowhere.

Property prices rise over time. If you’re looking to buy your forever home, then don’t let the economy put you off. Make sure you save more money and have a buffer to protect yourself.

We work closely with a mortgage broker who will get you competitive rates that will remove your worries about the future of the housing market. Get in touch with our team today by clicking here to book your appointment with them.

Alternatively, if you’re looking to sell, click here and book your free market appraisal. Your house or apartment could be worth more than you imagined, and we’ll give you a realistic and complimentary evaluation.