21 June 2023
If you are covering the latest UK House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:
"April’s house price data shows that prices have surprisingly gone up by 0.5%. The average UK house price was £286,000 in April 2023, which is £9,000 higher than 12 months ago, but £7,000 below the recent peak in September 2022.
"However, considering the mortgage storm that is currently battering the country, this is likely the last time we will see an increase in prices for some time. This morning’s flat inflation figure will have been exactly what mortgage borrowers didn’t want to see as those with low-cost deals will be bracing for their mortgage deals to come to an end and sadly find that their monthly payments skyrocket.
"The ultimate impact of this is that there is now a real risk of people falling into arrears. If you are in this position, there are somethings that you can do to help combat the worst happening, which would be for your home to be repossessed. Talking to your lender should be your first port of call. They may be able to offer a payment plan, mortgage holiday or even extending the term of your mortgage which can have a dramatic impact on monthly payments. Burying your head in the sand is the worst thing you can do. Unfortunately, the government has already ruled out a mortgage relief scheme, as their number one priority right now is reducing inflation and such a scheme would likely prove inflationary. The government may look to work with lenders to help them provide more support such as helping borrowers get on interest only deals for a short period, which could take some of the sting out of increasing interest rates.
"However, there are plenty of people who will have overstretched themselves and there is very little that can be done and will sadly have to sell their properties. If there is a flood of properties on the market at a time when demand is dampened because of budgetary concerns, then naturally house prices will start to shrink.
"We have seen huge turbulence in the mortgage market over the past week or so with lenders withdrawing products with next to no notice. The only thing that people looking to secure a deal at this time can do is get all the relevant documentation over to your lender or mortgage adviser as quick as possible to avoid you losing the deal and ultimately having to find another or pay more when the same product is put back on the market at a higher rate."
