Chaos in the UK housing market could lead to mortgages rising by thousands of pounds as products are withdrawn and prices fall, analysts warned on Friday.
HSBC, one of the country's biggest mortgage providers, said this was “going to hurt”.
Already, there are fewer mortgage products available and the ones that survived the cull generally have higher rates.
The UK has been hit by investor panic over the last week with markets and sterling sliding after a mini-budget announcement that was meant to tackle rampant inflation.
Emergency measures were introduced by Bank of England to take the sting out of the subsequent attack on the economy but it has reached into the housing market with a vengeance.
“The latest UK market turmoil and surging rate expectations are set to pile the pressure on the 11 million UK households with mortgages,” said Chris Hare, senior economist at HSBC Global Research.
“Even before the latest market volatility, mortgage rates had surged above 4 per cent, implying a jump in typical annual mortgage costs of around £3,500.
“And the rise in swap rates in recent days makes mortgage rates of 5.5 per cent an imminent possibility. That would see typical annual costs rise by a whopping £5,000.
“The hit is coming. We estimate an average income squeeze for all mortgagors of £700 this year and £1,300 next year.”
The current chaos comes on top of a longer-term drop off in house price rises, with Nationwide Building Society recording a zero per cent rise in house prices for August — the first month with no rise recorded rise since July last year.
“There have been further signs of a slowdown in the market over the past month, with the number of mortgages approved for house purchase remaining below pre-pandemic levels and surveyors reporting a decline in new buyer inquiries,” said Nationwide's chief economist Robert Gardner.
“Headwinds are growing stronger suggesting the market will slow further in the months ahead.
“High inflation is exerting significant pressure on household budgets, with consumer confidence declining to all-time lows. Housing affordability is becoming more stretched.”
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “The staggering jump in mortgage rates finally is starting to weigh on buyer demand.
“The increase in the stamp duty land tax threshold to £250,000, from £125,000, will do little to offset affordability issues caused by the coming surge in mortgage rates.”
Estate agent Ian Wyn-Jones said sales were collapsing because lenders were pulling mortgage deals.
“People want to put their houses up for sale because they literally can't afford the mortgages. It's a horrible situation,” he said.
“In the coming weeks we have people coming on because they want to sell now because their mortgage rate has changed and they want to get out”. He added that people are “getting cash in because they don't know what will happen in the future.”
In August, the number of homebuyer mortgage approvals increased sharply, the Bank of England said on Friday, but they also warned it was people trying to lock in deals before expected rates rises kicked in.
About 74,300 approvals were recorded in August, an increase from 63,700 in July and the highest since January.
“Mortgage approvals have continued to climb skyward in recent months, despite mortgage rates increasing in line with numerous base rate hikes by the Bank of England,” said Revolution Brokers director Almas Uddin.
“This has been spurred by a sense of urgency from the nation’s homebuyers, who are keen to secure what remain fairly reasonable rates in anticipation of further increases to come this year.”
On Wednesday Moneyfacts.co.uk, a financial services organisation, said 935 fewer residential mortgage products were on the market on Wednesday then on Tuesday — the highest fall on its records going back to November 2011.
Henry Synge, an estate agent in central London, said the collapsing pound was giving international buyers a discount.
“There's been a couple of US enquiries in the last week — a couple of speculators getting in touch, looking to park a bit of cash somewhere while it's reasonable. Actual offers will probably be further behind.”
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The schedule
December 5 - 23: Shooting competition, Al Dhafra Shooting Club
December 9 - 24: Handicrafts competition, from 4pm until 10pm, Heritage Souq
December 11 - 20: Dates competition, from 4pm
December 12 - 20: Sour milk competition
December 13: Falcon beauty competition
December 14 and 20: Saluki races
December 15: Arabian horse races, from 4pm
December 16 - 19: Falconry competition
December 18: Camel milk competition, from 7.30 - 9.30 am
December 20 and 21: Sheep beauty competition, from 10am
December 22: The best herd of 30 camels
MATCH INFO
Manchester City 3 (Sterling 46', De Bruyne 65', Gundogan 70')
Aston Villa 0
Red card: Fernandinho (Manchester City)
Man of the Match: Raheem Sterling (Manchester City)
Generation Start-up: Awok company profile
Started: 2013
Founder: Ulugbek Yuldashev
Sector: e-commerce
Size: 600 plus
Stage: still in talks with VCs
Principal Investors: self-financed by founder
Company%20profile
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
Killing of Qassem Suleimani
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
The five pillars of Islam
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
Russia's Muslim Heartlands
Dominic Rubin, Oxford
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
8 traditional Jamaican dishes to try at Kingston 21
- Trench Town Rock: Jamaican-style curry goat served in a pastry basket with a carrot and potato garnish
- Rock Steady Jerk Chicken: chicken marinated for 24 hours and slow-cooked on the grill
- Mento Oxtail: flavoured oxtail stewed for five hours with herbs
- Ackee and salt fish: the national dish of Jamaica makes for a hearty breakfast
- Jamaican porridge: another breakfast favourite, can be made with peanut, cornmeal, banana and plantain
- Jamaican beef patty: a pastry with ground beef filling
- Hellshire Pon di Beach: Fresh fish with pickles
- Out of Many: traditional sweet potato pudding
UAE currency: the story behind the money in your pockets
Tour de France Stage 16:
165km run from Le Puy-en-Velay to Romans-sur-Isère
Virtuzone GCC Sixes
Date and venue Friday and Saturday, ICC Academy, Dubai Sports City
Time Matches start at 9am
Groups
A Blighty Ducks, Darjeeling Colts, Darjeeling Social, Dubai Wombats; B Darjeeling Veterans, Kuwait Casuals, Loose Cannons, Savannah Lions; C Awali Taverners, Darjeeling, Dromedary, Darjeeling Good Eggs
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UAE currency: the story behind the money in your pockets
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
