House prices. The expert discusses the “interesting” price differences
Buyers who spend too much money on extremely cheap mortgages are vulnerable to rising costs. Those who buy – are interested in cheap debt – can fall from falling prices, as their homes turn into negative equity.
People whose mortgage debt is more than the value of their property will struggle to relocate or re-mortgage.
The Financial Conduct Authority found in 2013 that 630,000 households were in negative equity after a financial crash. In 2007-2009, prices fell by 18%.
The annual price boom of 20 percent in the late 1980s led to a decline in the 1990s, when the market declined in 1990-94.
In the mid-1990s, more than 10 million mortgage borrowers owed more than their assets were worth.
Millions of homeowners are faced with negative capital if the value of their home falls
The average house price in the UK has risen sharply
Home buyers today are reaching out as never before to step on the property ladder.
Prices have recently risen to record lows despite tougher economic conditions following the Covid epidemic and the cost-of-living crisis.
The Office for National Statistics now reports that prices are more than nine times the average.
Those who could afford to buy benefited from lower interest rates. The key interest rate is now one percent after a series of Bank of England increases.
View of houses in Dover, Kent
Builders are laying blocks at a construction site near Bristol
The bank has raised lending rates to curb rising inflation, but that means mortgage costs will inevitably rise.
According to broker Trussle, the average homeowner with a 4 224,000 mortgage can expect to pay an extra 1000 1,000 a year in interest.
A large deposit should provide some homeowners with an equity pad to protect them from market collapse.
However, most do not have such a boiler to see.
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Top 20 points for first time buyers
According to the Bank of England, one in six buyers in the last 2021 had less than 10% of their home deposits.
If more than 70,000 mortgages are approved each month, that means there are more than 11,600 small deposit buyers, or about 135,000 a year.
The typical two-year fixed-rate mortgage rate for a buyer with a 25 percent deposit has almost doubled from 1.2 percent in September to just over 2.3 percent in April.
People with a 10 percent deposit saw the interest rate fall below 2 percent to 2.6 percent at the beginning of the year.
New borrowers are especially concerned.
Two women study house price signs in a real estate agent window in Kentish, London
Some analysts warn that if prices fall as much as they did in the wake of the financial crisis or in the early 1990s, those with 95 percent mortgages run the risk of falling into negative equity.
Andrew Wishart of Capital Economics told The Telegraph: “If you are only in negative capital, you have more hope that prices will rise again at some point.
“When you get more than 20 percent off, that negative capital becomes a forced sale. “People are selling the house, leaving the mortgage.”
Surveyors say there is “little evidence” that rising house prices are losing momentum.
The Royal Institute of Certified Researchers (RICS) says that limited supply of affordable property կայուն steady growth in demand remains the main driver of house prices.
A survey by real estate experts at Rics last month found that a net balance of 10 percent reported a rise in new buyer demand, not a decline.
It was marked for the eighth month in a row when the survey yielded a positive net balance.
Slightly more homeowners reported a decline in new property listings than those who saw an increase in new listings in April.
Overall, this shows a steady trend in new homes entering the market.
The number of agreed sales was also largely unchanged in April, growing over the previous two months. Sales are expected to remain unchanged as we look to next year.
Surveyors also expect prices to continue to rise. 62% expect price increases for next year, which is lower than 78% of the February survey.
Rics economist Tarrant Parsons says: “Despite growing macroeconomic pressures in the form of cost of living and high interest rates, the UK’s housing market continues to see modest positive trends in new buyer surveys.
“At least for now, there is a lot of caution about the future economic landscape. It seems that the limited supply in the market combined with the steady growth in demand is still the main driver of house prices.
“As such, the fact that at this stage the significant increase in housing price inflation has been lost is small, while the expectations for the next 12 months have moderated only slightly from the recent highs.”
Fears of house price crash. “Unsold” Homes Warning on Interest Rates | Great Britain |: news
Source Fears of house price crash. “Unsold” Homes Warning on Interest Rates | Great Britain |: news