Ups and Downs of the Housing and Mortgage Markets

1 August 2023

Summer is here and activity in the housing and mortgage markets is hotting up… and cooling down! Latest data from the Royal Institution of Chartered Surveyors has good news on housing supply, with a run of thirteen successive negative monthly readings for new instructions coming to an end with a positive reading in May. This is the strongest reading for new listings since March 2021 [1]. Yet many commentators are predicting a fall in house prices in the second half of the year.

House Price Outlook

House price growth dipped in May, and notably the annual rate of growth fell to -1.0%, marking the first time since 2012 that house prices have fallen year-on-year. [2] It remains to be seen which direction the market will take in the second half of 2023.

If, as some are predicting, many homeowners are forced to sell when their current fixed-term mortgage deals end, the market could see a boost to supply that might reinforce the downward price movement. Analysts are also suggesting that first-time buyers (FTBs) could be delaying their homebuying plans in the hope that mortgage rates or house prices are poised to fall sharply before too long.

Bank Rate

Meanwhile, the Bank of England’s (BoE’s) Monetary Policy Committee (MPC) increased the Bank Rate again. Borrowing costs are now at their highest level since 2008. Those with tracker or variable rates have seen immediate higher repayments, and those on fixed rates are contemplating their next move.

Return of the 100% LTV Mortgage

One especially noteworthy development is the launch of a new mortgage product that allows FTBs to take out a loan on the full value of their home. The 100% loan-to-value (LTV) mortgage is exclusively for current renters and depends on their being able to prove a track record of timely rent payments. Otherwise, 100% LTV mortgages generally require a guarantor to cover any missed repayments.

Keeping Our Finger on the Pulse

Whatever happens in the coming months, we’re here to help with your mortgage needs.

[1] RICS, 2023

[2] Halifax, 2023

🚨 Data accurate as of the date of publication – 01.08.2023

🚨Think carefully before securing debts against your home.  Your home may be repossessed if you do not keep up repayments on your mortgage.

🚨 The above material is for informational purposes only and does not constitute a sales offer or financial advice. Before taking out any insurance, credit agreement or other financial product, you should obtain individual advice on your requirements and the general terms of the contract.


Source: Quilter Financial Planning – Essentially Mortgages Q3 2023

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