Average UK house prices have FALLEN for first month since June 2021 amid interest rate hikes

UK home costs have fallen for the primary time in a 12 months, new figures have immediately revealed, as consultants warn that rising rates of interest and the price of residing disaster at the moment are starting to chew.

Average home costs within the UK fell by 0.1 per cent month-on-month in July – a £365 fall in money phrases – in accordance newly launched information from Halifax. It means a typical UK property now prices £293,221.

The small however probably important gradual available in the market – the primary since June 2021 – comes after common UK home costs reached a file excessive of £293,586 in June.

In one piece of excellent information for owners, common property costs are nonetheless up 11.8 per cent throughout the nation year-on-year – an increase of round £30,000 when in comparison with July 2021.

However consultants say exercise within the housing market has ‘softened’ in current months, and {that a} ‘slowdown’ on home costs – which exploded throughout the pandemic – has been ‘anticipated for a while’.

They warn that elevated borrowing prices, sparked by current rises in rates of interest, at the moment are including to the squeeze on family budgets in opposition to a backdrop of ‘exceptionally excessive’ home price-to-income ratios.

It comes as The Bank of England yesterday introduced its sixth rates of interest rise since December. The Bank pushed up its base charge by 0.5 proportion level rise – the largest improve in 27 years – in a bid to regulate spiralling inflation.

Its base charge, which banks use to set mortgage prices, is now at a 13-year excessive of 1.75 per cent, up from 1.25 per cent. 

The rise is the sixth consecutive improve since December. And it has sparked warnings of a possible ‘mortgage time bomb’ for thousands and thousands of mortgage homeowners, as their fixed-rate loans come to an finish.

The fall in common UK property costs comes as:

  • Banks have been once more accused of cashing in on charge hikes by being fast to cross on will increase to debtors however dragging their toes relating to financial savings charges;
  • Struggling households face much more frequent vitality invoice hikes after watchdog Ofgem dominated the worth cap ought to be modified each three months quite than twice a 12 months;
  • It emerged that Chancellor Nadhim Zahawi and his deputy, Chief Secretary to the Treasury Simon Clarke, are each away from their desks as Britain faces dire financial warnings;
  • Unemployment predicted to rise from 3.7% to six.3% within the subsequent three years;
  • Bank of England predicts inflation will nonetheless now be above 9 per cent in a 12 months’s time – peaking at 13 per cent by the tip of 2022 or early 2023; 
Average house prices in the UK fell by 0.1 per cent month-on-month in July - a £365 fall in cash terms - according newly released data from Halifax. It means a typical UK property now costs £293,221

Average home costs within the UK fell by 0.1 per cent month-on-month in July – a £365 fall in money phrases – in accordance newly launched information from Halifax. It means a typical UK property now prices £293,221

Average house prices in the UK fell by 0.1 per cent month on month in July - a £365 month-on-month fall in cash terms - according newly released data from Halifax. It means a typical UK property now costs £293,221. Pictured: Library image

Average home costs within the UK fell by 0.1 per cent month on month in July – a £365 month-on-month fall in money phrases – in accordance newly launched information from Halifax. It means a typical UK property now prices £293,221. Pictured: Library picture

Russell Galley, managing director, Halifax, stated: ‘It’s essential to notice that home costs stay greater than £30,000 larger than this time final 12 months.

The common home value in every space and the way they’ve risen within the final 12 months 

East Midlands: £243,197 – Year-on-year: Up 12.2%

Eastern England: £342,687 – Year-on-year: Up 12.2%

London: £551,777 – Year-on-year: 7.9%

North East: £170,688 – Year-on-year: 11.3%

North West: £226,665 – Year-on-year: 12.6%

Northern Ireland: £187,102 – Year-on-year: 14.0%

Scotland: £203,677 – Year-on-year: 9.6%

South East: £399,003 – Year-on-year: 11.9%

South West: £310,846 – Year-on-year: 14.3%

Wales: £222,639 – Year-on-year: 14.7%

West Midlands: £250,051 – Year-on-year: 12.7%

Yorkshire and the Humber: £205,249 – Year-on-year: 10.4%

Figures in keeping with Halifax House Price Index 

‘While we should not learn an excessive amount of into any single month, particularly as the autumn is simply fractional, a slowdown in annual home value progress has been anticipated for a while.

‘Leading indicators of the housing market have not too long ago proven a softening of exercise, whereas rising borrowing prices are including to the squeeze on family budgets in opposition to a backdrop of exceptionally excessive home price-to-income ratios.

‘That stated, among the drivers of the buoyant market we have seen over current years – equivalent to additional funds saved throughout the pandemic, basic modifications in how individuals use their properties, and funding demand – nonetheless stay evident.

‘The extraordinarily quick provide of properties on the market can be a major long-term problem however serves to underpin excessive property costs.

‘Looking forward, home costs are more likely to come underneath extra stress as these market tailwinds fade additional and the headwinds of rising rates of interest and elevated residing prices take a firmer maintain.

‘Therefore a slowing of annual home value inflation nonetheless appears the almost certainly state of affairs.’

According to the figures, from Halifax’s House Price Index, home costs fell marginally by 0.1 per cent in July – the primary lower since June 2021.

According to the figures, the typical UK property now prices £293,221 – down £365 from the file determine of £293,586 in June.

The information additionally exhibits how the annual charge of progress of UK home costs eased from 12.5 per cent to 11.8 per cent between June and July.

Wales was on the prime of Halifax’s desk for annual home value inflation, with costs there rising by 14.7 per cent year-on-year.

In Scotland, the typical home value was at a file excessive of £203,677, though it did see a slight slowdown in annual home value progress in July, to 9.6 per cent from 9.9 per cent the earlier month. 

According to the figures, from Halifax's House Price Index, house prices fell marginally by 0.1 per cent in July – the first decrease since June 2021

According to the figures, from Halifax’s House Price Index, home costs fell marginally by 0.1 per cent in July – the primary lower since June 2021

According to the figures, the average UK property now costs £293,221 - down £365 from the record figure of £293,586 in June

According to the figures, the typical UK property now prices £293,221 – down £365 from the file determine of £293,586 in June

The data also shows how the annual rate of growth of UK house prices eased from 12.5 per cent to 11.8 per cent between June and July

The information additionally exhibits how the annual charge of progress of UK home costs eased from 12.5 per cent to 11.8 per cent between June and July

Your story: Have to procure a property not too long ago and at the moment are contemplating promoting up as a result of borrowing prices? 

Or are you trying to downsize to a small property to afford repayments?

Contact me: [email protected] 

In London, already file home costs have been pushed even larger in July. The common home value within the capital has elevated by £40,361 over the previous 12 months, Halifax stated.

Nicky Stevenson, managing director of property agent group Fine & Country, stated: ‘Cheap debt is quick disappearing and, in opposition to this backdrop, we are able to count on to see a dampening impact as buying energy continues to be eroded.

‘While the housing market and broader financial system don’t all the time transfer in tandem, the recession predicted by the Bank of England is certain to impact progress and client confidence.’

A bundle of Government cost-of-living assist is being delivered within the months forward, with households going through the prospect of hovering payments and shrinking actual incomes for a while to return.

Alice Haine, private finance analyst at Bestinvest, stated: ‘Once a recession digs in, then the specter of job losses will increase its ugly head – damaging purchaser confidence and dampening the market within the course of.

‘The actual turning level could possibly be the Bank of England’s resolution yesterday to hike rates of interest to 1.75 per cent.’

The Bank of England raised the bottom charge by 0.50 proportion factors on Thursday, taking it from 1.25 per cent to 1.75 per cent, marking the largest single charge bounce since 1995.

This will add round £50 monthly to common tracker mortgage prices, primarily based on common balances excellent, in keeping with calculations from commerce affiliation UK Finance.

  • Have to procure a property not too long ago and at the moment are contemplating promoting up as a result of borrowing prices? Or are you trying to downsize to a small property to afford repayments? Contact me: [email protected] 

Mortgage timebomb for MILLIONS: Even households on fastened charges face paying hundreds extra when offers finish after greatest rate of interest rise in 27 years – and banks are accused of failing to cross on hike to savers

By Adele Cooke for the Daily Mail

Millions of householders are going through a ‘mortgage time bomb’ as their fixed-rate loans come to an finish, consultants have warned, after the Bank of England imposed the quickest rate of interest rise since 1997 and consultants predicted it may hit 4% or extra by the tip of the 12 months.

The resolution got here as Governor Andrew Bailey additionally predicted the UK will collapse into a year-long recession by the tip of 2022 – its longest for the reason that 2008 monetary disaster and as deep because the one within the Nineties.

His doomsday warning additionally stated that inflation will now be peaking at greater than 13% – 11% above his personal goal – stoked by the hovering value of fuel and gas this winter. 

The Bank introduced a 0.5 proportion level rate of interest rise yesterday – the largest improve in 27 years – in a bid to regulate spiralling inflation. Its base charge, which banks use to set mortgage prices, is now at a 13-year excessive of 1.75 per cent, up from 1.25 per cent. Around 2million owners with tracker or variable charge loans face eye-watering mortgage invoice hikes consequently. 

Borrowers locked into low cost fastened offers will likely be shielded from any speedy improve in payments after the Bank of England yesterday hiked its base charge. But once they expire they face paying hundreds of kilos extra a 12 months at a time when most different family payments are additionally hovering.

Borrowers with a typical £150,000 mortgage on the typical customary variable-rate must pay an additional £44 a month, or £528 a 12 months, in keeping with figures from dealer L&C Mortgages. Those with £400,000 residence loans might want to discover a further £131 a month, or £1,572 a 12 months. 

Today Bank of England Governor Andrew Bailey denied claims he had failed in his job and had been ‘asleep on the wheel’ as he confronted a ferocious backlash after admitting inflation will cross 13 per cent – 11 per cent above his personal goal. 

As the BofE was dubbed the ‘Bank of doom and gloom’, Tory management favorite Liz Truss insisted final night time {that a} recession is ‘not inevitable’. She stated: ‘We can change the end result and we are able to make it extra probably that the financial system grows.’ Rishi Sunak claimed rates of interest would attain as excessive as 7 per cent underneath his rival Liz Truss’s proposals. He additionally predicted the UK will collapse right into a year-long recession by the tip of 2022.

Critics stated Bank officers together with its £575,000-a-year boss ought to ‘rue the day’ they determined to not increase rates of interest final 12 months and final night time Attorney General Suella Braverman stated rates of interest ‘ought to have been raised a very long time in the past and the Bank of England has been too gradual on this regard’.

And amid some requires him to resign, Mr Bailey instructed BBC Radio 4’s Today programme: ‘If you return two years, which is, given the financial transmission mechanisms, the place we might have to return to, given the state of affairs we have been going through at that time within the context of Covid, within the context of the labour market, the concept at that time we might have tightened financial coverage, you understand I do not keep in mind there have been many individuals saying that.’ 

As Mr Bailey set out the grimmest financial predictions for Britain in 60 years, it additionally emerged:

  • House costs fell in July for the primary time in additional than a 12 months as rising borrowing prices add to the squeeze on family budgets;
  • Experts warned that thousands and thousands of householders are going through a ‘mortgage ticking time-bomb’ as their fastened offers come to an finish and charges rise;
  • Banks have been once more accused of cashing in on charge hikes by being fast to cross on will increase to debtors however dragging their toes relating to financial savings charges;
  • Struggling households face much more frequent vitality invoice hikes after watchdog Ofgem dominated the worth cap ought to be modified each three months quite than twice a 12 months;
  • It emerged that Chancellor Nadhim Zahawi and his deputy, Chief Secretary to the Treasury Simon Clarke, are each away from their desks as Britain faces dire financial warnings;
  • Unemployment predicted to rise from 3.7% to six.3% within the subsequent three years;
  • Bank of England predicts inflation will nonetheless now be above 9 per cent in a 12 months’s time – peaking at 13 per cent by the tip of 2022 or early 2023; 

Deflation: Bank of England Governor Andrew Bailey denied he had been ‘asleep at the wheel’

Deflation: Bank of England Governor Andrew Bailey denied he had been ‘asleep on the wheel’

Inflation is now outstripping levels seen since the 1980s and appears to be out of control

Inflation is now outstripping ranges seen for the reason that Nineteen Eighties and seems to be uncontrolled

The Bank of doom and gloom

The Bank of England’s gloomy image of the state of Britain’s financial system over the approaching years:

RECESSION

The financial system will shrink for 15 months, beginning in October, wiping 2.1 per cent off the UK’s output from peak to trough. The recession will likely be so long as the downturn throughout the 2008 monetary disaster, though much less extreme.

INFLATION

The rise in the price of residing is about to peak at 13.3 per cent in October – the very best since 1980 – and stay excessive by means of a lot of 2023 as costs proceed to rise. Most of this will likely be pushed by the consequences of the conflict in Ukraine.

ENERGY

As western international locations attempt to shun Russia’s gas provides, and the Kremlin turns the fuel faucet off, vitality costs are rocketing. The common family’s annual vitality invoice will rise to £3,450 when the following value cap rise is pushed by means of in October – worse than anticipated.

INCOME

Households’ actual revenue – which takes into consideration inflation – will fall for 2 years, the primary time this has occurred since data started within the Sixties.

INTEREST RATES

The Bank has pushed up its base charge by 0.5 proportion factors, the biggest hike in 27 years, to 1.75 per cent. While this could assist to maintain a lid on costs, it should additionally trigger extra ache for mortgage holders and different debtors as the price of their debt climbs.

Experts have stated the rises ought to have began a lot earlier – and consequently predictions that it’ll hit 3% to 4% by the tip of this 12 months ‘might not be adequate’, one former BofE govt stated immediately.

Commentator and senior member of the Institute of Economic Affairs, Christopher Snowdon, stated final night time: ‘If my solely job was holding inflation at 2% however inflation was 9% and I anticipated it to rise to 13%, I’d wish to assume I’d have the decency to resign, even when I used to be incomes £575,000 a 12 months’.

Business leaders have been additionally irritated by Mr Bailey’s pessimism. Advertising tycoon Martin Sorrell stated: ‘Nobody was anticipating that immediately – he is rung the alarm bell and predicted a recession.’ He described the rate of interest hike as ‘an excessive amount of, too late’, including: ‘It’s grim and we’re in for a extremely tough time.’ Gerard Lyons, of wealth supervisor Netwealth, stated the ‘downbeat’ message delivered by Mr Bailey was ‘a mirrored image that the Bank of England is affected by a self-inflicted credibility hole’. 

Food, gas, fuel and quite a few different gadgets are rocketing in value following the pandemic and the conflict in Ukraine – hitting file ranges – however some economists have claimed that the BofE has been too gradual to behave as Britain careers in direction of recession. 

Anyone with a hard and fast charge deal will likely be shielded from charge hikes till the tip of their time period. But round 1.8million fastened charge mortgages are scheduled to finish subsequent 12 months, in keeping with banking commerce physique UK Finance.

David Hollingworth, of dealer L&C, estimates that round half of loans at present organized on fastened charges will expire within the subsequent two years.

Adrian Anderson, director at dealer Anderson Harris, warned: ‘We have a mortgage interest rate ticking time bomb scenario. Around 74 per cent of mortgages are fixed.

‘However, it is likely these borrowers will be moving on to much higher rates at a time when many other outgoings have already increased.’

The lowest two-year charges from the highest ten lenders have greater than doubled since December, in keeping with L&C.

The common two-year fastened deal is now at 3.46 per cent, up from 1.35 per cent – which works out at £1,952 a 12 months extra for a typical borrower with a £150,000 mortgage. The common five-year deal has additionally risen from 1.54 per cent to three.5 per cent over the identical interval, L&C’s information confirmed.

Many lenders additionally got here underneath hearth for pre-emptively rising the worth of mortgages forward of the Bank of England announcement yesterday. On Monday, Hinckley and Rugby Building Society elevated its customary variable charge to six.44 per cent.

Halifax has raised its fastened charge offers by 0.4 proportion factors, Lloyds by 0.27 and HSBC by 0.25. The Co-operative and Platform have each withdrawn their three and five-year fastened charge offers within the final two days, and Post Office Money has eliminated its mortgage vary totally.

The Bank of England predicts a year-long recession and near zero growth in GDP until after 2025

The Bank of England predicts a year-long recession and close to zero progress in GDP till after 2025

Slides predict that the upcoming recession will be as long as the one in 2008 - but not as deep as that one or others in the 1970s, and 1980s. It will be similar in depth to the one in the 1990s

Slides predict that the upcoming recession will likely be so long as the one in 2008 – however not as deep as that one or others within the Nineteen Seventies, and Nineteen Eighties. It will likely be related in depth to the one within the Nineties

The Bank of England’s personal inflation predictions the worth of gas, fuel and good will push up prices much more in 2024

The Bank believes that inflation will peak at the end of the year or early 2023 and drop again by 2025

The Bank believes that inflation will peak on the finish of the 12 months or early 2023 and drop once more by 2025

Santander introduced yesterday that its customary variable charge was rising by 0.5 proportion factors to five.99 per cent. 

Laura Suter, head of private finance at AJ Bell, stated: ‘Families are being hit by rising bills from all angles, whether it’s rising meals prices, a rise within the value to warmth their residence, hikes in childcare prices or larger payments for filling their tanks. Another improve in mortgage prices often is the straw that breaks the household finances.’

Meanwhile, banks have been accused of being fast to cross on will increase to debtors but dragging their toes relating to rewarding savers.

Some, together with Lloyds and NatWest, revealed final week that they’ve elevated their internet curiosity margins – the distinction between what they earn from debtors and pay savers – by 10 per cent or extra. 

The Bank of England has increased interest rates from 1.25 per cent to 1.75 per cent

The Bank of England has elevated rates of interest from 1.25 per cent to 1.75 per cent

A Cornwall Insight forecast shows the energy price cap will stay higher than £3,300 from October to at least the start of 2024 and could even hit £4,000

A Cornwall Insight forecast exhibits the vitality value cap will keep larger than £3,300 from October to at the least the beginning of 2024 and will even hit £4,000

The Bank of England has predicted that inflation will reach 13% in the coming months

The Bank of England has predicted that inflation will attain 13% within the coming months

NatWest has handed on the total 1.15 proportion level rise to owners on its customary variable charge, however upped its Instant Saver charge by simply 0.19 factors to 0.2 per cent.

Barclays has additionally handed on the total improve to debtors, however prospects in its Everyday Saver account nonetheless earn a derisory 0.01 per cent.

Two constructing societies, Coventry and Newcastle, have pledged to cross on the total base charge rise to the vast majority of savers from August 25. 

Santander will improve charges on some accounts from September 1. But its easy-access eSaver 18, now closed to new prospects, will rise from 0.05 per cent to only 0.1 per cent.

ALEX BRUMMER: In uneven seas, does the Bank have the correct captain?

By Alex Brummer for the Daily Mail 

Tough occasions are coming. That is the conclusion we must always draw from the Bank of England’s extraordinary actions yesterday: Raising the bottom charge of curiosity by a full half-percentage level – the very best bounce in 27 years – whereas making dire forecasts about our financial future.

Can we draw any consolation from the grim prediction that the surge in the price of residing will proceed all through subsequent 12 months and into 2024, and that inflation may soar as excessive as 13.3 per cent this winter?

We can. The Bank’s blundering Governor, Andrew Bailey, has been mistaken in most of his forecasts up up to now.

His credibility is badly shot – and he might have overstated the issue. But you don’t should take my phrase for it.

EY, the audit and consulting big, argues that the UK ‘economy will perform better than the Bank predicts’ and accuses the Bank’s inflation forecasts of ‘resting on limited foundations’. 

The Bank’s blundering Governor, Andrew Bailey, has been wrong in most of his forecasts up to this point. His credibility is badly shot – and he may have overstated the problem. But you don’t have to take my word for it

The Bank’s blundering Governor, Andrew Bailey, has been mistaken in most of his forecasts up up to now. His credibility is badly shot – and he might have overstated the issue. But you don’t should take my phrase for it

Another City agency, Capital Economics, additionally disputes the Bank’s predictions, saying Bailey’s recession forecasts are ‘deeper and longer’ than its personal.

All that helps to elucidate why Liz Truss, the frontrunner to be our subsequent prime minister, desires to evaluation the Blair-era guidelines underneath which the Bank operates independently of the Government.

The Commons’ Treasury choose committee is already setting hearings on the subject.

Nevertheless, there appears little doubt that the speedy financial information is lower than rosy. Interest charges are predicted to go as excessive as 3 per cent subsequent 12 months – on the similar time that Britain faces its highest tax burden since Clement Attlee’s socialist administration of 1945.

There have now been six month-to-month interest-rate rises in a row – as many readers with mortgages can have observed.

Homeowners on ‘tracker’ offers, which rise and fall with interest-rate will increase, or on their banks’ ‘standard rate’, have suffered speedy hikes. But maybe the largest shock will likely be felt within the months to return by owners coming off fixed-rate offers set two, three or 5 years in the past – when charges in some circumstances have been under 1 per cent.

Online property portal Rightmove estimates that first-time consumers will now face month-to-month mortgage funds rising to 40 per cent of their gross salaries – a sacrifice not seen for a decade. Savers, who far outnumber individuals with residence loans, have thus far seen scant profit from larger rates of interest, regardless that the worth of their financial institution deposits is being ravaged by excessive inflation.

Bailey put himself on their aspect yesterday, requesting that prime avenue banks do the correct factor and provide extra aggressive returns. We shall see in the event that they pay attention. But many might not – not least as a result of the Bank, underneath Bailey’s management, has come underneath heavy hearth not just for its defective forecasting, however for its tone-deaf proclamations for employees to point out wage restraint (from a Governor who trousered greater than £575,000 final 12 months).

Like a lot of the general public sector, additionally it is by the rising wokery that has seen working from residence develop into entrenched within the Old Lady of Threadneedle Street.

Faced with expenses he has been asleep on the wheel as inflation has greater than tripled from 4 per cent solely a 12 months in the past to 13.3 per cent later this 12 months, Bailey’s mealy-mouthed excuse – that the Bank couldn’t have foreseen the conflict in Ukraine and the extraordinary influence it has had on vitality costs – doesn’t wash.

Nor did he provide even a scintilla of a mea culpa yesterday – regardless of having failed in his clear remit to maintain inflation to a 2 per cent goal. Bailey ought to have heeded the stark warning in May 2021 from the Bank’s former chief economist Andrew Haldane, who stated that the ‘inflation genie’ was about to flee the bottle.

With the Bank now threatening to ‘act forcefully’ by elevating rates of interest even quicker than anticipated within the coming months, the case for relieving customers and companies from swingeing taxes is even clearer.

Former Chancellor Rishi Sunak has had an overdue Damascene second and embraced a reduce in VAT for motorists in addition to a hefty reduce within the primary charge of revenue tax to twenty per cent – however solely by the tip of the last decade.

Liz Truss is ready to behave a lot quicker, promising to rescind the 1.25 proportion level nationwide insurance coverage hike and cancel the vicious rise in company tax from 19 per cent to 25 per cent subsequent 12 months.

A tax-cutting finances this autumn would be the solely good choice if the financial system is to flee the double whammy of upper taxes and rising rates of interest.

The huge concern is that the Bank, having been so mistaken about inflation for greater than a 12 months, is now doubling down, elevating charges at a terrifying pace.

In doing so, it dangers squeezing the lifeblood out of an financial system that has carried out higher than many different industrialised nations this 12 months. Our prosperity and employment depend upon it steering a protected course by means of these treacherous waters.

The query is, is Andrew Bailey the correct captain for the ship?