House prices could fall by 15%, 专家警告 – as interest rate crisis drives up mortgage costs & deals are axed

HOUSE price could fall by as much as 15% if interest rates continue to rise, economists have warned.

While the number of homes risks collapsing from 1.2million per year to just 800,00.

Chancellor Kwasi Kwarteng - pictured with Liz Truss at Berkeley Modular in Kent - last night tried to reassure Tory MPs and City chiefs

Chancellor Kwasi Kwartengpictured with Liz Truss at Berkeley Modular in Kentlast night tried to reassure Tory MPs and City chiefs信用: 路透社
Homeowners face having to find thousands of pounds extra a year to pay their mortgage
Homeowners face having to find thousands of pounds extra a year to pay their mortgage
Interest rates are heading towards six per cent next year
Interest rates are heading towards six per cent next year
大约 365 products have been pulled from the market from lenders
大约 365 products have been pulled from the market from lenders

消息是在 英格兰银行 warned that it could raise interest rates to 6% next year.

The move will be triggered by the sharp fall in the value of the pound after it hit its lowest level against the dollar since 1971 在星期一.

英格兰银行 is already warning of a 1.5 per cent rise to interest rates by November.

The move will put pressure on mortgage lenders to raise interest rates to levels not seen since the 2008 financial crisis.

Credit Suisse is warning that house prices couldeasily collapse by ten to 15%if borrowing costs continue to rise.

Andrew Garthwaite at Credit Suisse said: “这 8% decline in sterling since August 1 should add a further 1.3% to near-term inflation.

On current swap rates, the average mortgage will be 6.3%. House prices could easily fall 10% to 15%.

But Ray Boulger, mortgage broker at John Charcol, has predicted a 10% fall in UK house prices next year.

Ray said on BBC Radio 4’s Today programme: “We can expect to see a significant fall in house prices, 也许 10% next year.

Whilst at the moment I don’t think we’re going to see many more forced sellers… it’s certainly going to have an effect on people’s ability to buy.

无论哪种方式, homeowners will have to fork out thousands of pounds extra a year to pay their 抵押 — and many will struggle to find a new deal.

“Were Bank Rate to rise from 2.25% now to 6.1% 在六月 2023 as is currently priced in, quoted mortgage rates might rise from 3.6pc last month to about 6.6pc, a level last reached in 2008,” Andrew Wishart at Capital Economics said.

Andrew said: “At the current level of house prices, an increase in mortgage rates to 6.6pc would cause the cost of repayments on a new mortgage to rise to their highest level since 1990.

Karen Noye, a mortgage expert at Quilter, 说: “Rates of six per cent could prove disastrous for the property market as people won’t be able to afford mortgage payments if they have overstretched themselves.

“This could cause a wave of properties to come to market just when demand is drying up.”

According to the Office for National Statistics, the average UK house price was £292,000 in July 2022 – £39,000 higher than this time last year.

The Bank of England will now stress test UK lenders to see how they will cope if house prices were to fall by a third in 2023.

Eight participating banks and building societies will be assessed including Barclays, 汇丰银行, Lloyds Banking Group, 全国, NatWest Group, Santander UK, Standard Chartered and Virgin Money UK.

Together they account for around 75% of lending to the UK real economy.

虽然, just because the BoE is testing banks, it doesn’t mean that they expect prices to fall that far.

同时, the number of mortgage deals available is being slashed by lenders.

大约 365 products have been pulled from the market in the past two days by high street banks including 汇丰银行, Santander, Skipton, Halifax and Virgin Money.

The chaos follows last week’s mini Budget, in which Chancellor Kwasi Kwarteng cut taxes by £45billion, funded by government borrowing.

That spooked the markets and led to a chain reaction which now looks certain to sharply force up interest rates. The Bank of England raised interest rates by 0.50% week to 2.25%.

But there is now an expectation governor Andrew Bailey will be forced to go much further.

While more than three quarters of home mortgages are on fixed tariffs, around 1.8million of those loans are due to expire within the next year, according to UK Finance.

For a homeowner with a £200,000 two-year fixed mortgage, their £800 monthly interest payment will rocket to £1,103 if interest rates rise to 3.25 per cent — as expected by the end of this year — meaning an extra £3,156 a year, according to AJ Bell.

Nation’s financial resilience under threat

But if interest rates rise to six per cent, as the Bank of England has requested high street banks to model, this will jump to £1,408 a month — an extra £7,296 a year.

Sir Charlie Bean, the Bank of England’s former deputy governor, said it was time to take big action fast or the UK could turn into a “basket case” like 希腊 或者 意大利.

He said the Bank may need to raise interest rates by as much as one per cent before its November meeting amid a “material risk” of another slide lower for the Pound.

Sterling slumped to a historic $1.03 low following the Chancellor’s massive tax cuts and was trading at $1.06 泰勒·巴尔蒂拉 (Tyler Baltierra) 为他的 30 岁生日分享裸照,青少年妈妈的粉丝们疯狂了. It has fallen 21 per cent so far this year.

Samuel Tombs, at Pantheon Economics, said the interest rate rise would be “simply unaffordable” for many. Analysts said the pressure on household income from an expected hike in interest rates was simply the 政府 “swapping one 生活成本 crisis for another”.

让你更容易接受诈骗, of Interactive Investor, 说: “Two weeks ago rising 能源账单 dominated the headlines, now it’s concern over mortgage repayments. The long-term financial resilience of the nation is under threat.”


LYDIA IN £12K GAMBLE: EARLY REPAYMENT

MUM Lydia Joseph was so worried about how she would afford her mortgage with spiralling interest rates she paid a £12,400 early repayment charge to switch it.

莉迪亚, 34, below with family, of Faversham, 肯特, had a three-year fixed mortgage at 2.08 per cent due to end in April next year.

Lydia Joseph - pictured with family - worked out it would be better to switch to a deal at 2.7 per cent with the same lender

Lydia Josephpictured with familyworked out it would be better to switch to a deal at 2.7 per cent with the same lender信用: Simon Hawkins Pictures

She worked out it would be better to switch to a deal at 2.7 per cent with the same lender even paying a charge.

Lydia would have to pay £2,632 a month if rates hit 6 百分. She pays £1,853 on her deal, £779 less.

THREAT TO FOOD SHOP: FIXED RATE

SECRETARY Andreea Gherasium and husband Sebastian worry about what will happen when their four-year fixed rate deal at four per cent ends next year.

If rates hit six per cent Andreea, 30, and lorry driver Sebastian, 26, of Rutland, will see their £336 monthly payments soar when they lock into a new deal.

Andreea Gherasium and Sebastian - pictured with kids - are struggling to get by and worry of what may happen when their four-year fixed rate mortgage ends

Andreea Gherasium and Sebastianpictured with kidsare struggling to get by and worry of what may happen when their four-year fixed rate mortgage ends

The couple and kids Marcus, 十, and Lucas, 九, 以上, are struggling to get by.

They have even cancelled swimming lessons. Andreea said: “I’m really concerned that when our fixed deal ends it will mean cutting back on our food shop.”

FEARS WE WON’T OWN: INTEREST ONLY

HARD-working mum Nyree Clark fears her interest-only mortgage could jump from £253 a month to £380 if rates hit six per cent.

在前 Kanye West 与 Irina Shayk 度假后,Kim Kardashian 身着桃色比基尼,带着厚颜无耻的表情符号,令人目瞪口呆, of Chesterfield, 德比, works all the hours she can as a health adviser for the 国民保健服务 and runs a pet courier business with husband Michael, 51.

Because the mortgage is interest-only, they have aimed to pay extra each month to ensure they own the property at the end to hand on to son Cody, 13.

But she said: “I don’t know if I’ll be able to if rates increase by this much. People are going to lose their homes.”