According to the largest mortgage lender in the UK, the Halifax, there has been a decline in house prices of 1% in comparison to last year. This marks the first annual decrease in house prices since 2012.
According to Halifax, which is a part of Lloyds Banking Group, the average cost of houses in May was £3,000 less compared to the previous year. Additionally, it is £7,500 lower than the highest price recorded in August.
The lending institution, which is currently increasing its mortgage rates, stated that the rise in borrowing expenses was negatively impacting the level of trust and belief in the
Over the past few weeks, certain mortgage rates have experienced a significant increase.
Lenders are expecting an increase in the Bank of England’s base rate due to the extended duration of high inflation levels, which is leading to general price rises.
Kim Kinnaird, the director of Halifax Mortgages, stated that the cooling down of housing demand will have a significant impact on the confidence of both buyers and sellers, making them adjust their expectations accordingly.
As a result, it is predicted that there will continue to be a decrease in house prices
According to the Halifax, the typical cost of a home in the UK is now £286,532. However, there has been a slight decrease in prices since the previous month. The reason for the drop in prices compared to last year is mainly due to the strong housing market at that time.
According to the statement, the prices have decreased in the southern region of England. However, all other regions besides Wales have experienced a decrease in the rate of annual price growth.
The Nationwide, a competing lender, has reported a more significant drop in the cost of houses based on their own data. Just one week ago, they stated that the worth of properties had decreased by 3.4% between May of the previous year and the current year, which marks the most significant decrease in value in 14 years.
First-time home buyers may appreciate the idea, but unexpectedly high mortgage rates are limiting their ability to make purchases.
Additional data indicates that the increasing expenses of daily life are probably decreasing individuals‘ capacity to save, like setting aside funds for a down payment. UK Finance, an organization representing banks, revealed that the amount of money saved in immediately accessible savings accounts decreased during the first quarter of the year, which is the first decline in 15 years.
Lenders have different ways of determining house prices, based on their own mortgage information. While there may be differences between them, both the Halifax and the Nationwide have observed a stagnant market, and predict a continued decline in property prices.
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According to the predictions of Capital Economics analysts, the Halifax measure of house prices will experience a decline of 12% from its highest point in August of last year.
Real estate agents are suggesting that the slowdown in price drops over the past month is an indication that property values may not experience significant decreases in the future.
According to Tom Bill, who is in charge of UK residential research at estate agent Knight Frank, a possible decrease in the housing market will not be significant due to several factors. These include increasing wages, a low rate of unemployment, cash sales, high levels of housing equity, mortgages with longer repayment periods, and savings accumulated during the pandemic.
According to him, the UK’s housing market is experiencing a gradual decline after a period of significant growth that lasted three years, instead of a sudden and drastic drop.
Moneyfacts‘ information reveals that the average interest rate for a new fixed-rate mortgage agreement is 5.79% for a two-year plan and 5.47% for a five-year program.
The current interest rates are significantly higher compared to the period prior to December 2021 when the rates started to increase. However, the current rates are lower than what they were after the mini-budget of
Fresh statistics from UK Finance reveal that a growing number of individuals are choosing to obtain mortgages with extended payback periods. According to the report, a historic 20 percent of initial homebuyers are selecting mortgage plans that span beyond a 35-year timeframe.
According to UK Finance, clients may be opting for this choice "to decrease monthly payments and, in turn, enhance their ability to afford them."
The UK economy is currently facing challenges due to the effects of inflation and increasing interest rates.
A recent study conducted by the OECD indicates that out of all the developed economies, only Germany is expected to have a worse performance than Britain in 2023. The think tank predicts that the UK’s growth rate will increase by a mere 0.3% this year, but it is expected to moderately improve to 1% by 2024.
The current forecast is a little better than the previous one made in March. It predicted a decrease of 0.2% this year and an increase of 0.9% next year.
If a mortgage payment is missed, there can be consequences. To learn more about what those consequences
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