Chaos in the UK housing market could lead to mortgages rising by thousands of pounds as products are withdrawn and prices fall, analysts warned on Friday.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.”
UAE currency: the story behind the money in your pockets
Day 4, Dubai Test: At a glance
Moment of the day Lahiru Gamage appeared to have been hard done by when he had his dismissal of Sami Aslam chalked off for a no-ball. Replays suggested he had not overstepped. No matter. Two balls later, the exact same combination – Gamage the bowler and Kusal Mendis at second slip – combined again to send Aslam back.
Stat of the day Haris Sohail took three wickets for one run in the only over he bowled, to end the Sri Lanka second innings in a hurry. That was as many as he had managed in total in his 10-year, 58-match first-class career to date. It was also the first time a bowler had taken three wickets having bowled just one over in an innings in Tests.
The verdict Just 119 more and with five wickets remaining seems like a perfectly attainable target for Pakistan. Factor in the fact the pitch is worn, is turning prodigiously, and that Sri Lanka’s seam bowlers have also been finding the strip to their liking, it is apparent the task is still a tough one. Still, though, thanks to Asad Shafiq and Sarfraz Ahmed, it is possible.
Zayed Sustainability Prize
The years Ramadan fell in May
UAE currency: the story behind the money in your pockets
ADCC AFC Women’s Champions League Group A fixtures
October 3: v Wuhan Jiangda Women’s FC
October 6: v Hyundai Steel Red Angels Women’s FC
October 9: v Sabah FA
Killing of Qassem Suleimani
The five pillars of Islam
On Instagram: @WithHopeUAE
Although social media can be harmful to our mental health, paradoxically, one of the antidotes comes with the many social-media accounts devoted to normalising mental-health struggles. With Hope UAE is one of them.
The group, which has about 3,600 followers, was started three years ago by five Emirati women to address the stigma surrounding the subject. Via Instagram, the group recently began featuring personal accounts by Emiratis. The posts are written under the hashtag #mymindmatters, along with a black-and-white photo of the subject holding the group’s signature red balloon.
“Depression is ugly,” says one of the users, Amani. “It paints everything around me and everything in me.”
Saaed, meanwhile, faces the daunting task of caring for four family members with psychological disorders. “I’ve had no support and no resources here to help me,” he says. “It has been, and still is, a one-man battle against the demons of fractured minds.”
In addition to With Hope UAE’s frank social-media presence, the group holds talks and workshops in Dubai. “Change takes time,” Reem Al Ali, vice chairman and a founding member of With Hope UAE, told The National earlier this year. “It won’t happen overnight, and it will take persistent and passionate people to bring about this change.”
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
UAE currency: the story behind the money in your pockets
UK%20record%20temperature
%3Cp%3E38.7C%20(101.7F)%20set%20in%20Cambridge%20in%202019%3C%2Fp%3E%0A
More on animal trafficking
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
The Way It Was: My Life with Frank Sinatra by Eliot Weisman and Jennifer Valoppi
Hachette Books
HOW DO SIM CARD SCAMS WORK?
Sim swap frauds are a form of identity theft.
They involve criminals conning mobile phone operators into issuing them with replacement Sim cards, often by claiming their phone has been lost or stolen
They use the victim's personal details - obtained through criminal methods - to convince such companies of their identity.
The criminal can then access any online service that requires security codes to be sent to a user's mobile phone, such as banking services.
Company%20profile
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Yabi%20by%20Souqalmal%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EMay%202022%2C%20launched%20June%202023%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3EAmbareen%20Musa%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInitial%20investment%3A%20u%3C%2Fstrong%3Endisclosed%20but%20soon%20to%20be%20announced%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E12%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3Eseed%C2%A0%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EShuaa%20Capital%3C%2Fp%3E%0A
