Mortgage Costs: The Biggest Challenge for Homeowners

As the UK’s largest mortgage lender, Halifax, has recently stated, mortgage costs remain the biggest challenge facing homebuyers and those coming to the end of fixed-term deals. This is a pressing concern, especially with the current interest rates and house price growth.

The delicate balance of the UK housing market

According to Amanda Bryden, the head of mortgages at Halifax, the market is “delicately balanced” and sensitive to changes in the Bank of England’s base rate. This is understandable, given the impact of higher interest rates on mortgage payments. The Bank’s base rate currently stands at 5.25%, the highest level in 16 years.

The Effects of Higher Interest Rates

The effects of higher interest rates are being felt by many homeowners, particularly those coming to the end of fixed-rate deals. The current average rate for a two-year fixed deal is 5.93%, although this is lower than last year’s peak of 6.86%. Despite this, major lenders have been cutting rates in recent days.

Mortgage rates are still a challenge for homeowners

Regional House Price Growth

Northern Ireland saw the fastest regional house price growth, up 4% from a year earlier. London still has the most expensive property prices, now averaging £536,306.

The Property Market and the Government

The property market is likely to be at the top of the new government’s agenda in the coming weeks and months. Labour has promised to build 1.5 million homes over the next parliament, aiming to do this through reforming planning rules and allowing development on lower-quality areas in the green belt, dubbed the “grey belt”.

The government’s plans for housebuilding

The Resolution of the Election Campaign

The resolution of the election campaign could boost the market, as seen in the rise of shares in housebuilders on Friday. Vistry Group, Persimmon, and Taylor Wimpey all saw a 4% increase in their shares.

The Future of the Property Market

The Halifax predicts that property values are likely to rise modestly through this year and into 2025. However, the market remains “tepid” due to a combination of higher mortgage rates and “sky-high” house prices as demand outstrips supply.

The future of the UK property market

In conclusion, mortgage costs remain a significant challenge for homeowners, and the property market is delicately balanced. As the government addresses the issues of housing supply and affordability, it is essential to consider the impact of higher interest rates and house price growth on the market.