Asking prices for UK homes have stagnated over the past month as a “messy” mortgage market and rising borrowing costs have shaken confidence in property sales.
New sellers listed their homes for an average of £372,812 in the four weeks to June 10, £82 less than the previous month, representing a marginal drop after five months of growth, the site’s data shows Rightmove real estate website.
Asking prices, a leading indicator of sellers’ and agents’ confidence in the housing market, had risen since the start of the year as the real estate sector recovered from the market turmoil triggered by the autumn’s “mini” tax reduction budget.
The housing market has suffered another setback in recent weeks as lenders rush to raise mortgage rates. Borrowing costs rose after stronger-than-expected inflation data at the end of last month revised expectations for how long the Bank of England will have to keep raising interest rates.
“Average new seller asking prices . . . declined slightly this month, signaling that the late spring price rebound has quickly turned into an earlier than usual summer downturn,” said Rightmove Director Tim Bannister.
Rightmove said the number of new agreed sales fell “slightly” in the weeks following the unwelcome inflation the data was released, while demand from new buyers registering interest on the platform remained unchanged. Consumer price inflation came in above expectations at 8.7% in April.
Lucian Cook, head of UK residential research at Savills estate agents, said the numbers were still “surprisingly robust”, noting that if confidence in the housing market had improved buyers were likely to be more cautious in the face of uncertain interest rates.
“You’re probably going to have a more W-shaped recovery in the housing market,” he said.
The average two-year fixed mortgage rate edged closer to 6% last week, from 5.26% in early May, according to financial site Moneyfacts. Major lenders including HSBC, NatWest and Nationwide had to reprice quicklyor pull offers from the market as borrowers rush to secure their rates.
Rightmove said the “messy” mortgage market prompted customers to check their mortgage affordability on its website, with visits up 53% since the end of May.
UK house prices have fallen 4% from their peak in August, according to Nationwide. The mortgage lender said prices fell 3.4% in May from a year earlier, the biggest annual drop since 2009.
Analysts predict prices could fall by as much as 10% overall over the next two years, particularly if stubbornly high inflation continues to drive up borrowing costs.
Property analysts are eagerly awaiting the next UK inflation report and Bank of England rate decision, due this week. “We expect there will be more changes to come…It’s likely to look very frantic for those taking out mortgages right now,” Bannister said.
Addtional Piece
While the housing market in the UK has shown signs of recovery after the initial impact of the COVID-19 pandemic, recent factors have caused a slowdown in the growth of asking prices for homes. The “messy” mortgage market and rising borrowing costs have contributed to a decline in sellers’ confidence, resulting in stagnation in the housing market over the past month.
The real estate website, Rightmove, reported that new sellers listed their homes for an average of £372,812 in the four weeks leading up to June 10th, which was £82 less than the previous month. This marginal drop comes after five months of continuous growth in asking prices. The market had initially seen an increase in confidence and prices after the turmoil caused by the autumn’s “mini” tax reduction budget. However, the recent rise in borrowing costs due to stronger-than-expected inflation data has reversed this trend.
Rightmove Director Tim Bannister mentioned that the decline in average new seller asking prices signals an early summer downturn, reversing the late spring price rebound. The number of new agreed sales also experienced a slight decline following the release of the inflation data, while demand from new buyers remained unchanged. This suggests that buyers are becoming more cautious in the face of uncertain interest rates.
Lucian Cook, head of UK residential research at Savills estate agents, finds these numbers surprisingly robust. However, he predicts a more W-shaped recovery in the housing market, indicating possible fluctuations in buyer confidence depending on how interest rates develop.
In recent weeks, the mortgage market has become increasingly “messy” as lenders rush to raise mortgage rates. The average two-year fixed mortgage rate reached almost 6% last week, compared to 5.26% in early May. This sudden increase has led major lenders such as HSBC, NatWest, and Nationwide to quickly reprice or even pull offers from the market as borrowers rush to secure their rates. Rightmove has witnessed a significant increase of 53% in customer visits to check mortgage affordability on their website since the end of May.
Despite these setbacks and uncertainties, it is important to note that the UK housing market has already shown resilience in the face of various challenges. For example, Nationwide reported a 4% fall in house prices from their peak in August, with a 3.4% decline in May compared to the previous year. Analysts predict that prices could potentially fall by up to 10% over the next two years, especially if inflation remains high and continues to drive up borrowing costs.
Moving forward, property analysts are eagerly awaiting the upcoming UK inflation report and the Bank of England’s rate decision, both of which are expected this week. These factors will play a crucial role in shaping the future of the housing market. Tim Bannister anticipates more changes to come and warns that it may be a frantic time for those looking to take out mortgages.
Summary:
- Asking prices for UK homes have stagnated over the past month due to a “messy” mortgage market and rising borrowing costs.
- New sellers listed their homes for an average of £372,812 in the four weeks to June 10, representing a marginal drop after five months of growth.
- The housing market had initially recovered from the market turmoil triggered by the “mini” tax reduction budget.
- Lenders rushing to raise mortgage rates and stronger-than-expected inflation data have caused setbacks in the housing market.
- Average new seller asking prices declined, signaling an early summer downturn.
- The number of new agreed sales fell slightly, while demand from new buyers remained unchanged.
- The average two-year fixed mortgage rate increased, leading to lenders repricing or pulling offers from the market.
- The “messy” mortgage market prompted customers to check their mortgage affordability on Rightmove’s website.
- UK house prices have fallen 4% from their peak in August, with analysts predicting further potential decline.
- Eager anticipation of the next UK inflation report and Bank of England rate decision.
Overall, the UK housing market is facing challenges as sellers’ confidence is shaken by the messy mortgage market and rising borrowing costs. Despite initial recovery, recent setbacks have led to stagnation in asking prices. Buyers are becoming more cautious, and analysts predict a possible decline in house prices. The upcoming inflation report and rate decision will influence the future trajectory of the housing market, making it a frantic time for those involved in the mortgage process.
Summary:
Asking prices for UK homes have stagnated due to a “messy” mortgage market and rising borrowing costs. New sellers listed their homes for an average of £372,812 in the past month, a marginal drop after five months of growth. The housing market initially recovered from market turmoil triggered by a tax reduction budget and had been on an upward trend. However, lenders rushing to raise mortgage rates and stronger-than-expected inflation data have caused setbacks. Average new seller asking prices have declined, signaling an early summer downturn, and the number of new agreed sales has also slightly fallen. The average two-year fixed mortgage rate has increased, leading to lenders repricing or pulling offers from the market. The “messy” mortgage market has caused customers to check mortgage affordability on Rightmove’s website. UK house prices have fallen 4% from their peak in August, and analysts predict further potential decline, with prices possibly falling by up to 10% over the next two years. The upcoming UK inflation report and Bank of England rate decision are eagerly awaited, as they will influence the future trajectory of the housing market.
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Asking prices for UK homes have stagnated over the past month as a “messy” mortgage market and rising borrowing costs have shaken confidence in property sales.
New sellers listed their homes for an average of £372,812 in the four weeks to June 10, £82 less than the previous month, representing a marginal drop after five months of growth, the site’s data shows Rightmove real estate website.
Asking prices, a leading indicator of sellers’ and agents’ confidence in the housing market, had risen since the start of the year as the real estate sector recovered from the market turmoil triggered by the autumn’s “mini” tax reduction budget.
The housing market has suffered another setback in recent weeks as lenders rush to raise mortgage rates. Borrowing costs rose after stronger-than-expected inflation data at the end of last month revised expectations for how long the Bank of England will have to keep raising interest rates.
“Average new seller asking prices . . . declined slightly this month, signaling that the late spring price rebound has quickly turned into an earlier than usual summer downturn,” said Rightmove Director Tim Bannister.
Rightmove said the number of new agreed sales fell “slightly” in the weeks following the unwelcome inflation the data was released, while demand from new buyers registering interest on the platform remained unchanged. Consumer price inflation came in above expectations at 8.7% in April.
Lucian Cook, head of UK residential research at Savills estate agents, said the numbers were still “surprisingly robust”, noting that if confidence in the housing market had improved buyers were likely to be more cautious in the face of uncertain interest rates.
“You’re probably going to have a more W-shaped recovery in the housing market,” he said.
The average two-year fixed mortgage rate edged closer to 6% last week, from 5.26% in early May, according to financial site Moneyfacts. Major lenders including HSBC, NatWest and Nationwide had to reprice quicklyor pull offers from the market as borrowers rush to secure their rates.
Rightmove said the “messy” mortgage market prompted customers to check their mortgage affordability on its website, with visits up 53% since the end of May.
UK house prices have fallen 4% from their peak in August, according to Nationwide. The mortgage lender said prices fell 3.4% in May from a year earlier, the biggest annual drop since 2009.
Analysts predict prices could fall by as much as 10% overall over the next two years, particularly if stubbornly high inflation continues to drive up borrowing costs.
Property analysts are eagerly awaiting the next UK inflation report and Bank of England rate decision, due this week. “We expect there will be more changes to come…It’s likely to look very frantic for those taking out mortgages right now,” Bannister said.
https://www.ft.com/content/1e32b465-afc5-4c13-a652-809ff8685359
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