Iwona Hovenko, real estate analyst at Bloomberg Intelligence has commented on the latest Royal Institution of Chartered Surveyors (Rics) survey released this morning.
She said: “As expected, the sharply rising mortgage rates have made it even tougher for prospective buyers to afford a property, while also hitting a wider housing-market confidence – especially as it took just weeks for the mortgage rates to surpass the levels last seen amid the post mini-budget meltdown. This has spooked many potential homebuyers, as evident in RICS’ June survey.
“The elevated mortgage rates may continue dragging the housing market for the foreseeable future, until there are signs of inflation getting under control and a clarity emerging about the end of Bank of England’s rate hikes. In turn this could help reduce pressure on mortgage rates and help the housing market find its balance again.
“Unfortunately – given the faster-than-expected wage and inflation growth in recent months – there seems to be limited scope for mortgage rates falling markedly in the near term, which may weigh on housing activity in the coming months. The longer the mortgage rates remain near their current elevated levels, the larger the potential damage inflicted on house prices and transactions. The next big test may be the July inflation data (to be released in August), which will include energy price cap falling by almost 20%.”
