UK estate agents have warned that house sales are currently collapsing as lenders pull mortgage offers in reaction to the mini-budget, Mirror reports.
Soaring mortgage costs are poised to impact the two million households on a variable deal over the next few months leaving many people fearing that they will be forced to sell up as a result.
The property market was left in turmoil after last week’s mini-budget, which also sent the pound plunging to an all-time low against the US dollar.
Banks and building societies reportedly pulled 1,000 deals from the market within 24 hours following analysts’ warnings that interest rates could hit 6 per cent next year, bringing misery for homeowners.
Interest rates currently stand at 2.25 per cent. When rates rise it affects everyone on a tracker mortgage, with standard variable rate (SVR) deals generally impacted too.
Lenders are the ones to decide whether rises put up your SVR deal and the majority decide to do so.
Property experts are now warning of a 15 per cent or 20 per cent fall in house prices, if there is a decline in demand, which would slash around £58,000 off the average property price.
For buyers, affordability may become an issue - as they will need to prove that they can afford repayments if mortgage rates hit 7 per cent next year.
Speaking to BBC Radio 4, North Wales estate agent Ian Wyn-Jones said, “What I’ve seen in the last 24 hours, a lot of my clients’ mortgage offers have been pulled, properties have collapsed in terms of the sales, chains have collapsed, it’s wiped a lot of cash from the pipeline.
“It doesn’t look good at the moment. We had about four properties yesterday where lenders just pulled their offers.”
Graham Cox - director of the firm Self Employed Mortgage Hub - told The Guardian that falling prices could be inevitable unless inflation falls.
Mr Cox said, “Unless we are very lucky and inflation falls much more quickly than predicted, I don’t see any other outcome than a sizeable fall in house prices – possibly 20 per cent-plus over the next two to three years.
“I’ll be accused of being a doom-monger, but if you use simple maths and common sense, how can house prices not fall?”
On September 28 the Bank of England was forced to intervene and announce it will start buying up bonds.
The central bank said the emergency move was to avoid a “material risk to UK financial stability” and to calm markets.
When central banks buy their country's own bonds - a sort of debt - interest rates reportedly tend to fall.
It was later revealed that pension funds faced "mass insolvencies" without action from the BoE.
Measures announced include abolishing the higher rate 45 per cent tax bracket for the most wealthy, along with reversing the 1.25 percentage point National Insurance hike.
The International Monetary Fund (IMF) has urged the UK Government to reconsider its plans for tax cuts over fears it could drive up inequality and put more pressure on prices.
Meanwhile, the Bank of England has said it won't hesitate to change interest rates “by as much as needed” to bring inflation under control. It currently sits at 9.9 per cent.
Mr Kwarteng is expected to detail medium-term debt-cutting plans on November 23. This will also reportedly include forecasts from the independent Office for Budget Responsibility on the full scale of Government borrowing.
Source: Mirror
(Links and quotes via original reporting)
UK estate agents have warned that house sales are currently collapsing as lenders pull mortgage offers in reaction to the mini-budget, Mirror reports.
Soaring mortgage costs are poised to impact the two million households on a variable deal over the next few months leaving many people fearing that they will be forced to sell up as a result.
The property market was left in turmoil after last week’s mini-budget, which also sent the pound plunging to an all-time low against the US dollar.
Banks and building societies reportedly pulled 1,000 deals from the market within 24 hours following analysts’ warnings that interest rates could hit 6 per cent next year, bringing misery for homeowners.
Interest rates currently stand at 2.25 per cent. When rates rise it affects everyone on a tracker mortgage, with standard variable rate (SVR) deals generally impacted too.
Lenders are the ones to decide whether rises put up your SVR deal and the majority decide to do so.
Property experts are now warning of a 15 per cent or 20 per cent fall in house prices, if there is a decline in demand, which would slash around £58,000 off the average property price.
For buyers, affordability may become an issue - as they will need to prove that they can afford repayments if mortgage rates hit 7 per cent next year.
Speaking to BBC Radio 4, North Wales estate agent Ian Wyn-Jones said, “What I’ve seen in the last 24 hours, a lot of my clients’ mortgage offers have been pulled, properties have collapsed in terms of the sales, chains have collapsed, it’s wiped a lot of cash from the pipeline.
“It doesn’t look good at the moment. We had about four properties yesterday where lenders just pulled their offers.”
Graham Cox - director of the firm Self Employed Mortgage Hub - told The Guardian that falling prices could be inevitable unless inflation falls.
Mr Cox said, “Unless we are very lucky and inflation falls much more quickly than predicted, I don’t see any other outcome than a sizeable fall in house prices – possibly 20 per cent-plus over the next two to three years.
“I’ll be accused of being a doom-monger, but if you use simple maths and common sense, how can house prices not fall?”
On September 28 the Bank of England was forced to intervene and announce it will start buying up bonds.
The central bank said the emergency move was to avoid a “material risk to UK financial stability” and to calm markets.
When central banks buy their country's own bonds - a sort of debt - interest rates reportedly tend to fall.
It was later revealed that pension funds faced "mass insolvencies" without action from the BoE.
Measures announced include abolishing the higher rate 45 per cent tax bracket for the most wealthy, along with reversing the 1.25 percentage point National Insurance hike.
The International Monetary Fund (IMF) has urged the UK Government to reconsider its plans for tax cuts over fears it could drive up inequality and put more pressure on prices.
Meanwhile, the Bank of England has said it won't hesitate to change interest rates “by as much as needed” to bring inflation under control. It currently sits at 9.9 per cent.
Mr Kwarteng is expected to detail medium-term debt-cutting plans on November 23. This will also reportedly include forecasts from the independent Office for Budget Responsibility on the full scale of Government borrowing.
Source: Mirror
(Links and quotes via original reporting)