30 August 2024
If you are covering the latest Nationwide house price index, please see the following comment from Karen Noye, mortgage expert at Quilter:
"The latest data from Nationwide reveals house prices experienced a drop during the usual mid-summer lull. In August, house prices edged down by 0.2% but the annual rate of house price growth continued to edge higher. Average prices were up 2.4% year on year. These quieter months usually see a slowdown as people focus on holidays rather than house hunting. However, this summer has still marked a recovery after several months of relatively flat results, reflecting the challenging economic conditions but a strong housing market.
"As conditions become more predictable, both buyers and sellers are gaining confidence that they can achieve their housing goals without the looming threat of mortgage shocks, which might mean there is a bounce in prices in the autumn. The recent decision by the Bank of England to cut its base rate from 5.25% to 5% has further bolstered this confidence, even though the cut's direct impact on tracker mortgages and standard variable rate mortgages (SVR) will be relatively minor, and fixed-rate mortgage costs have largely already factored in this small reduction.
"The structure of the mortgage market, with a large proportion of homeowners on fixed-rate deals, has so far cushioned many from the full impact of rising interest rates. However, as these deals begin to expire, the market could face renewed pressure, particularly if further rate cuts are slower or less substantial than anticipated, which could curtail house price growth later this year and next.
"Prospective buyers now face a dilemma: whether to lock in a fixed-rate mortgage now or opt for a tracker mortgage that allows them to benefit from potential future rate cuts. However, the appeal of fixed-rate deals, offering certainty in uncertain times, continues to attract many."
