- UK House Prices Experience Largest Annual Decline in 14 Years – Nationwide
- Mortgage Interest Rates Reach 15-Year High, Affecting Housing Affordability
- Housing Market Subdued as Mortgage Rates Continue to Rise, Bank of England Anticipates Interest Rate Hike
In July, house prices in the United Kingdom fell at the quickest annual rate in 14 years, according to Nationwide.
The building society reported a 3.8% decline in prices, the largest annual decline since July 2009.
According to Nationwide, mortgage interest rates remained elevated, posing an affordability challenge for homebuyers.
In July, mortgage costs reached their greatest level in 15 years due to uncertainty surrounding the interest rate set by the Bank of England.
According to Nationwide, the average price of a property in the United Kingdom is currently £260,828, which is approximately £13,000 less than its peak in August of last year.
House prices have risen in recent years, including during the Covid pandemic, to the delight of numerous first-time purchasers.
However, Nationwide reported that despite the decrease in mortgage rates in July, housing affordability remained constrained.
Robert Gardner, chief economist at Nationwide, stated that a first-time buyer with an average income and a 20% down payment would spend 43% of their take-home pay on mortgage payments. This is predicated on a mortgage interest rate of 6%.
A year ago, these new householders would have spent slightly more than a third of their income on mortgage payments.
Tuesday’s data revealed that mortgage rates continue to rise. According to the financial information company Moneyfacts, the typical two-year fixed mortgage rate is now 6.85%, up from 6.81% the day before.
On Monday, the rate on a five-year fixed mortgage increased by 0.03%, to 6.37 percent.
Due to house affordability issues, Mr. Gardner said the housing market has been slow. In June, there were 86,000 consummated housing transactions, a decrease from the previous year’s total of over 100,000.
Mortgage rates have increased after the Bank of England raised interest rates to battle excessive inflation.
The Bank is anticipated to raise interest rates from 5% to at least 5.25 % on Thursday. This would be the fourteenth increase in interest rates since December 2021.
In June, the UK inflation rate slowed to 7.9%, but food prices remain elevated.
Mark Harris, CEO of mortgage broker SPF Private Clients, stated that the anticipated increase in interest rates means “we are not out of the woods yet in terms of rising mortgage costs.”
After better-than-expected inflation figures, HSBC, Barclays, and Nationwide have decreased their fixed-rate mortgage rates.
Gabriella Dickens, principal UK economist at Pantheon Macroeconomics, stated, “We believe that house prices will need to decline by approximately 8% from their peak before demand and supply are in equilibrium again.
