Property prices could fall by “20%+ over the next 2-3 years” – mortgage experts deliver their verdict

Michael Webb, Managing Director at Brandon-based Mortgage Republic: “Most people were expecting the next interest rate increase to happen at the scheduled November meeting, but it may come sooner than that, potentially this week or next. If an emergency rate rise does occur, it will be an enormous shock for many borrowers and could hit property market sentiment hard. The property market is facing a phenomenal level of uncertainty.”

Robert Payne, director of Bristol-based Langley House Mortgages: Up until recently, I have been optimistic we will not see a housing crash but given what is happening it is now a much more realistic possibility. I never thought we would witness such significant rate rises in such a short period of time and the impact this is going to have on monthly payments is going to be unaffordable for many borrowers. Up until August of this year, lenders were required to ask for evidence that the mortgage payments would still be affordable if there were a rate rise of 3% but we are already experiencing rate rises higher than this so those that borrowed to their maximum capacity and just about squeezed into the affordable bracket will see their payments become unaffordable even by the conservative rules of regulation, let alone the reality that people’s mortgage payments were already breaking the bank when they were much cheaper.”

Manooch Suree, director at Uxbridge-based mortgage broker, Zinga Financial Servces: “Mortgage rates have never flashed so loudly on people’s radars. If rates were to rise again after an emergency meeting, it has the potential to bring the the purchase market to a grinding halt due to fears of what could happen next, which will invariably impact prices. We are in a highly fluid mortgage market now, with conditions changing by the day. People like certainty and there’s not much of that right now.”

Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “We must remember we have a chronic housing shortage, and mortgage lenders want to lend. Those two things together are the opposite of what would predict a crash. Lenders are withdrawing rates because they don’t know how to price them accurately, not because they don’t want to lend. Will prices fall? Possibly. Will we see a crash? For all our sakes, let’s hope not.”

James Miles, director of Exeter-based broker, The Mortgage Quarter: “The pressure cooker is about to pop. We’re seeing borrowers strongly re-evaluate their lending options and demand will almost certainly start to weaken. If demand drops then prices, or at least the rate of price growth, will too.”

Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial: Homeowners have spent too much on DIY improvements since lockdown to want to let their prized possession be sold on the cheap. That, coupled with more rigorous affordability criteria, will ensure house prices hold up, although transaction levels will likely fall of a cliff.”

Marcus Wright, MD of independent mortgage broker, Bolton Business Finance“There could come a point at which increasing mortgage payments due to interest rate rises massively reduces demand for houses, which will clearly be bad news for property prices. We might not be there yet but what if rates go up another 1%, 2% or 3%? Higher interest rates on mortgages have the potential to significantly reduce demand among people up-sizing or moving, as well as property investors. Then, of course, a lot of people may not pass banks’ affordability checks, which means they can’t buy the homes they want. Higher rates could also increase supply, as more people sell up if they cannot afford their mortgage and we may possibly see an increase in repossessions. All of these factors mean we may well see a property crash.”

Mark Robinson, Managing Director of Southampton-based Albion Forest Mortgages: Lenders are pulling their products left, right and centre because they have no idea what is going to happen with interest rates. In the Bank of England versus Truss war, borrowers and homeowners are caught in the crossfire. I am hopeful that in a week or two we will have a clearer idea of what is going on. Hopefully the Bank of England will make a proper statement and then we will all know where we stand, lenders included. But the property market will be tested like never before in the weeks and months ahead.”

Related Articles

Sign up to the IFA Newsletter

Name

Trending Articles


IFA Talk is our flagship podcast, that fits perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast – listen to the latest episode

IFA Magazine
Privacy Overview

Our website uses cookies to enhance your experience and to help us understand how you interact with our site. Read our full Cookie Policy for more information.