According to Halifax, UK house prices fell for the sixth consecutive month in September. Mortgage and Property experts alike have been reacting to the news:
An expert from Confused.com’s broker partner, Mojo, comments:
“There have been reports of house prices falling. This is likely due to the increase in rates affecting affordability.
“Some might see rates falling as an opportunity to buy a home at a reduced cost. But it’s important to note that rising mortgage rates might offset the savings you make.
“Also, falling house prices put people at risk of negative equity, when you owe more on your mortgage than your house is worth. This can make it difficult to remortgage, and selling the property might not be possible unless you have a way to make up the shortfall.
“To reduce the risk of going into negative equity, you may want to consider:
- Putting down a larger deposit or buying a cheaper property if you’ve not already bought your home. This reduces the loan amount you need to take out.
- Overpaying your mortgage if you already own your home. This allows you to increase your equity faster to limit the risk of negative equity. But most lenders have a limit on how much you can overpay before you face additional fees.
“It’s also important to consider the implications of rising house prices. A strong economy, low interest rates, or high demand, among other factors, could increase property values.
“If house prices were to increase rapidly, existing homeowners could find themselves with increased home equity; this might open the door for better remortgage rates.
“But in a worst-case scenario, an unsustainable rise in property prices could lead to a housing bubble. When it bursts, those who have borrowed significantly may find themselves in negative equity. If the Bank of England reacts by increasing interest rates, those with variable-rate or tracker mortgages could see their repayments rise.
“In a rising market, you may want to consider:
- Borrow cautiously, ensuring you can manage repayments if interest rates rise
- Opting for a fixed-rate mortgage to make sure your payments remain the same for a period of time, even if rates rise
- Regularly checking your property’s value and your equity position, allowing you to make informed decisions
“Remember that while there are reports of falling house prices, demand and supply vary significantly for different property types and areas. Research your local property market and consult a mortgage broker to understand the situation before buying.”
