Following the Nationwide June HPI published this morning, mortgage advisers and brokers have commented.
Peter Dockar, chief commercial officer at fintech residential mortgage lender, Gen H: “Common sense would suggest that, with interest rates as they are, house prices will fall, but given the lack of supply it’s unlikely they’ll fall far. The ongoing lack of supply may explain the relative stability of prices in June. As expected, of course, borrowers are worried. Those who locked into lower mortgage rates in 2021 are facing what can seem like an insurmountable increase in their payments. They need to choose between fixing now, perhaps at more than 6%, or trying to ride the SVR in the hope of rate reductions in the medium term. Neither is an attractive option. This is a challenging time for many and our concern is that the government’s Mortgage Charter doesn’t go far enough. It is at best a temporary tourniquet for the structural issues in the housing market that successive governments have failed to address. General sentiment remains that owning a home is still preferable, often with the support of family.”
Michael Bailey, director at Preston-based Michael Bailey Estate Agent: “As the Nationwide suggests, a lot depends on the resilience of the jobs market in the months ahead. However, asking prices have been steadily reducing since last year. The market has changed and some valuers and sellers have been over-optimistic with their asking prices and are now having to reduce them to get sold. Higher competition levels among sellers, and more sellers full stop, are driving the increase in price reductions. In our area, there are now 40% more homes on the market, meaning buyers have more choices and sellers need to price competitively to stand out and get sold. I haven’t yet seen a dramatic increase in asking price reductions since the most recent base rate increase. That had been expected and priced in.”
Paul Welch, CEO at London-based LargeMortgageLoans.com: “The Nationwide believes a relatively soft landing is still possible, and I agree that the pain in the property and mortgage markets will be relatively short-lived, six to nine months perhaps, so it’s a case of just trying to get through this turbulent phase. Though the base rate is now expected to peak higher than just a few months ago, stories of expected house price crashes are way off the mark. A house price correction after many years of cheap borrowing is more likely. If your home becomes unaffordable in the short term, then speak to an adviser about your options and work out a plan to keep hold of your home. Most lenders and advisers want to step up and support you by offering help such as mortgage payment holidays or extending your mortgage term. Don’t suffer quietly, ask for help.”
Nick Harris, co-founder at Wokingham-based Quarters Residential Estate Agents: “Sellers fall into two camps currently by either pricing aggressively, often at the behest of agents who see dwindling stock levels, or sensitively, and it won’t come as a surprise that only the latter are agreeing sales. While there are fewer buyers in the market, those who are looking are serious and are organised with finance in place and a compelling reason to move. The market still has a pulse and a soft landing, as unlikely as it may feel right now, is still possible.”
Kundan Bhaduri, director of London-based property developer and portfolio landlord, The Kushman Group: “Though this data suggests prices are fairly stable, the UK property market is experiencing some serious turbulence following 13 base rate rises, with mortgage rates soaring and house prices hanging in the balance. Buyer and seller reactions during June have remained mixed but, overall, caution appears to be the watchword. We have decided to use this as a buying opportunity, taking into account the historical trends in the property market, and the macro factors still being in favour. For start, the ongoing lack of housing supply and new construction projects will provide support to house prices in the turbulent second half of 2023. Affordability, influenced by factors such as wage growth and inflation, is a crucial consideration, too. For the first time since 2008, the economy is adapting to drastically new macro conditions, and the interplay of significantly higher interest rates, supply shortages and affordability issues are set to shape the market for the rest of this year and well into next.”
Ranald Mitchell, director of Norwich-based independent mortgage broker, Charwin Private Clients: “House prices are without doubt under pressure and sellers need to be more realistic with their asking prices, but the crash many are predicting is unlikely to materialise. The reason is supply, which is still very weak. There just aren’t enough properties for people to buy, and this will act as a glass floor under prices. The jobs market is also still holding up, for now at least.”
Ross McMillan, owner at Glasgow-based Blue Fish Mortgage Solutions: “In Scotland, the signs are appearing that the slower housing market and associated flattening of prices seen in other parts of the UK, may finally be starting to get its claws embedded into the Scottish market as well. The increase in prominence of mainstream media reporting around increased rates and overall volatility in the mortgage market has inevitably resulted in some hesitancy and increased concern from those looking to purchase, but in general first-time buyers remain active and, beyond the impact on affordability, appear largely unaffected by negative sentiment or the scars that may itch on existing homeowners and mortgage holders. Stress testing, increased rates and overbearing regulation continue to strangle landlords and so buy-to-let purchases are largely extinct. Expectation and hope is for a degree of calmness rate-wise over the summer but the fate of the market for the rest of 2023 will hang squarely on inflation showing some worthwhile positive movement. After the disappointing data around inflation last week, it was inevitable that the perpetual attack on borrowers in pursuit of the mythical Golden Fleece of 2% inflation would continue, regardless of the lack of any real evidence that the effect of the previous rate rises has been allowed time to filter through and be measured and assessed.”
