30 June 2023
If you are covering the Nationwide House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“At first glance, this morning’s Nationwide House Price Index suggests the housing market is weathering the current mortgage storm better than might have been expected, with prices broadly flat over the month with a modest 0.1% increase in prices – reversing the 0.1% fall in May. However, year on year house prices are down 3.5%, and the real impact of rising interest rates is likely to be reflected in the coming months as prospective buyers are put off by increased costs.
“Nationwide reports there has been no decline in the number of mortgage applications, but this is likely due to the number of people pushing applications through before lower rates were ripped from lenders’ shelves. The higher interest rates that have replaced them are likely to make moving or buying a first home unaffordable for many, so we can expect a downtick in new applications and the majority of business to come from those needing to remortgage.
“This is likely the last time we will see even a modest increase in house prices for some time given the recent turbulence in the mortgage market. Borrowers coming to the end of their low-cost deals will be bracing for a steep increase in their monthly payments, and those who had been looking to take their first step onto the property ladder or move home will likely put their plans on hold. What’s more, there will sadly be some people who have overstretched themselves and will have to sell their properties to reduce costs. If there is an influx of properties on the market at a time when demand is weak, then house prices will naturally fall.
“As more people are forced to remortgage onto higher rates, there will be an increased risk of people falling into arrears. The government’s new Mortgage Charter will bring some relief to borrowers who are struggling, but it is important that people still take matters into their own hands and speak to their lender. The Charter requires Lenders to offer tailored support, which could include extending your mortgage term to reduce payments or offering a switch to interest only payments, both of which could reduce the pressure significantly.
“Those still looking to secure a deal during this turbulent time will need to be well prepared with all the relevant documentation to hand to ensure you can get it to your lender or mortgage adviser as quickly as possible. Lenders have been withdrawing products with little to no notice, so acting quickly will be the best way to avoid losing a deal and potentially having to face higher costs when the same product is put back on the market at a higher rate.”
