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House prices fall as higher mortgage rates bite – Halifax

  • 07/11/2022
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House prices fall as higher mortgage rates bite – Halifax
House prices in the UK dropped by 0.4 per cent in October as the impact of sharply rising mortgage costs was felt across the market.

The average home value stands at a five-month low of £292,598, down a typical £1,066 from September, according to the Halifax house price index.

Annual growth slowed to 8.3 per cent in October from 9.8 per cent in the month prior.

First-time buyer prices saw the biggest drop from 10.1 per cent of growth in September to 7.5 per cent in October.

All regions, except the North East were impacted by lower growth over the same time period.

London lags other regions with house prices up 6.8 per cent over the last 12 months – though this remains the biggest cash increase of any UK region over the past year at £34,900.

The slowdown comes off the back of September’s ill-fated mini Budget which panicked markets and pushed up mortgage rates.


House prices could fall further

Critics say house prices are likely to dip further in the coming months with the economy predicted to go into recession.

Kim Kinnaird, director Halifax Mortgages, said: “While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini Budget which saw a sudden acceleration in mortgage rate increases.

“While it is likely that those rates have peaked for now – following the reversal of previously announced fiscal measures – it appears that recent events have encouraged those with existing mortgages to look at their options, and some would-be homebuyers to take a pause.

“Understandably we have also seen consumer caution grow, as industry data shows mortgage approvals and demand for borrowing declining. The rising cost of living coupled with already stretched mortgage affordability is expected to continue to weigh on activity levels. With tax rises and spending cuts expected in the Autumn Statement, economic headwinds point to a much slower period for house prices.”


‘Outlook for mortgage market more positive’

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “House prices fell again in October as higher mortgage costs, as well as the increase in the cost of living, continue to be reflected in the numbers.

“Despite another interest rate rise, with the threat of more to come, the outlook for the mortgage market is much more positive than it has been in recent weeks. Pricing on fixed-rate mortgages continues to settle as swaps have fallen.

“Lender appetite and competitiveness may also increase as activity falls, adding further impetus to the recent rate reductions. In the meantime, borrowers are opting for tracker or variable mortgages, biding their time until fixes fall further.”

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