The risk of house price crash is “much more likely” than a few months ago, analysts are warning After a week of turmoil in the financial markets, a fall in house prices of 10 per cent or more is now a “realistic outcome” 🔴 DonnaLFerguson reports
If current projections about interest rates – predicting the average two-year mortgage deal– are correct, “a double-digit fall in house price is very, very possible and very likely”, he said.Average rates for two and five-year fixed-rate mortgages are predicted to say relatively high for three more years
However, he does not expect to see a large number of forced sales coming on to the market. “For those people who are coming to the end of a two-year or a five-year fixed rate, I think the increase in mortgage costs will be painful and it will have a pretty significant impact on their household finances. But I’m not convinced that it necessarily means they will look to sell, because rates have been so low and were so low when they took on their mortgage debt.
Yet this strategy, which increases the total cost of repaying the mortgage over the term, will not be an attractive or even a viable option for everyone. “Clearly there will be some who would just say, it’s not sustainable,” he said. Using current market expectations, the foundation estimates that the total annual repayments made by British mortgagors could increase by £9.5bn by the end of 2026, compared to where they are now. Around £4.7bn of this increase is due to fall in 2024. “Next year could be a particularly painful one for British mortgagors,” said spokesperson Simon Pittaway.
All eyes are on the Office for National Statistics, which will release its latest report on the rate of inflation on Wednesday. “The market has reacted very negatively to some of the economic data over the last month, and I remain hopeful that they have overreacted and we might see some positive news on inflation coming out this Wednesday and in the future,” Hudson said.
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