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Mortgage and Property experts react to ONS House Price Index

by | Oct 18, 2023

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Following the release of the latest ONS House Price Index, mortgage and property experts have shared their thoughts with IFA Magazine.

Tony Hall, Head of Business Development, Saffron for Intermediaries commented: “Although the market has become accustomed to persistent house price growth, this recent softening is not cause for concern. Swap rates and interest rates remain broadly stable, which should help to coax demand and in turn reinforce the value of housing stock.

“There have also been suggestions that the Bank of England will again announce it is maintaining the base rate when it next meets on 2nd November, which would be a further and significant sign of confidence in the market. The UK economy has also returned to growth, albeit marginal, after a worse-than-expected July.


“Lenders remain keen to add to their loan books, and with swap rates remaining relatively stable, many products are actually being priced downwards. At Saffron, we have just announced that we have increased the maximum loan size on Residential and Self-Build Large Loan products, and revamped the range with lower rates. I remain confident that reports of a huge market crash are overblown. The mortgage market might be in choppier waters than we have become used to, but that is no reason to believe that it is about to sink.”

Matt Thompson, head of sales at Chestertons, says: “In August, buyers were adopting a more strategic property search by adjusting their budget or widening their search criteria to find a suitable home. Although some buyers took a break during the August holidays, others utilised the month to enter price negotiations or seal the deal by signing contracts. 

“Chestertons sold 5% more properties in August compared to July and registered more new buyers, suggesting that house hunters had digested the higher mortgage rates at the time and were taking advantage of the slower sales market.”


Richard Harrison, Head of Mortgages, Atom bank said: “Prices continue to rise more slowly, with today’s data reflecting the challenging time the property market has experienced so far in 2023, with rising rates negatively impacting how much buyers are able to borrow as well as customer confidence. As a result, activity in the market has remained subdued and the latest Bank of England approval figures point to a marked reduction in purchase activity, with August’s numbers some 37% lower than the same period last year. This is particularly true in the South of England, which has seen house prices fall as people face ongoing affordability challenges.

“However, there is some cause for cautious optimism. Softening prices present an opportunity for first-time buyers, and many experts now think that Base Rate has reached its peak, with headline mortgage pricing falling over the last 12 weeks. This is unlikely to stimulate an immediate dramatic bounce in activity and prices, but it does reduce the potential of a more pronounced reduction in prices as had previously been speculated by some commentators.”

Charlotte Nixon, mortgage expert at Quilter: “The headline figure of a 0.2% increase in house prices over the last 12 months should be taken with a pinch of salt, as it fails to tell the whole story. With just this morning, the CPI inflation figure coming in at 6.7%, we can see that house prices are nowhere near keeping up with the level of inflation elsewhere in the economy.


“Added to this, house price data tends to massively lag the real world events happening today. The market is very subdued at the moment and this lack of demand is causing sellers to drop prices in a bid to attract those who might be adopting a wait and see approach.

“There are some positive movements though. Rightmove data also released today, shows that the average 5-year fixed mortgage rate is now 5.42%, down from 6.08% a year ago and the average 2-year fixed mortgage rate is now 5.88%, down from 6.32% a year ago. Falling rates will help people feel more secure in their search for a home without the threat of a rug being pulled out from under them by rates skyrocketing.

“However, it is likely that we are going to see prices stall and fall throughout the country in the coming months. Interest rates are probably going to stay higher for longer than originally anticipated but those who can afford to move despite elevated rates will eventually decide to take action especially if they are renting and their re-entry into the market will hopefully provide some buoyancy in the spring of 2024. 


“The increasingly tight rental market will ultimately push more people into trying to buy as people find that mortgage rates could end up being cheaper than rent. Additional data published today found that private rental prices paid by tenants in the UK rose by 5.7% in the 12 months to September 2023, up from a revised 5.6% in the 12 months to August 2023. Some more lucky first time buyers will be looking to the Bank of Mum and Dad for a deposit to help them potentially achieve lower monthly payments in a home of their own compared to the sky high rental market, which continues to hot up as landlords sell up due to its unprofitability.”

Nathan Emerson, CEO of Propertymark said:“This drop in house price is no surprise, is needed and should not be seen as a negative. This slowing is playing a crucial part in combatting interest rates and improving homebuyers’ affordability.”

“Our agents report that more and more tenants are falling into arrears but without Government intervention to incentivise investment, this is going to worsen. The growing disparity in the number of homes available to rent when compared with increased demand from prospective tenants is alarming and continues to widen from already worrying levels.


“Governments across the UK need to urgently address the underpinning reason for these issues which is undersupply and must now look to adequately incentivise landlords to provide desperately needed homes in the private rented sector.”

Arjan Verbeek, CEO of Perenna commented: “While a temporary slowing of annual house price growth may be a welcome sight for some, would-be homeowners are still faced with a market that offers very little certainty. A system based on short-term fixed rates has proven itself ineffective at getting homes in the hands of deserving individuals.

“Instead, long-term fixed rate mortgages are the key; increasing affordability as well as providing peace of mind in a turbulent economic circumstances. It’s time for lenders, regulators, and the government to recognise and support the enormous value that long-term fixed rate mortgages will bring to the UK housing ecosystem.”


Vikki Jefferies, Proposition Director at PRIMIS, said: “August is a notoriously quiet month, and it is likely that today’s figures have been impacted by a seasonal drop in demand on top of the longer-term trends. Furthermore, lenders reducing their rates in recent months is having a positive impact on consumer sentiment and should start to ease some of the price sensitivity we have seen from buyers.  

“However, given comments this week from the Deputy Governor of the Bank of England that relatively higher interest rates are here for the foreseeable future, it is important for brokers to establish how they can best support customers in a higher interest rate environment. This means emphasising the importance of income protection and having conversations with their customers as early as possible to understand their individual needs and find the most appropriate product for them. Mortgage networks’ training and workshops can provide invaluable support for brokers in managing customer and lender relations at this time.” 

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