In May, it was announced that house prices fell on an annual basis for the first time in 11 years.
In the statement of Halifax, which is a part of Lyods Banking Group, it was stated that the price of an average house is 286 thousand 582 pounds, and it was emphasized that prices fell for the first time since December 2012 on an annual basis.
“As expected, the short-term rise in the housing market in the first quarter of the year decreased with the gradual reflection of high interest rates on household budgets and especially on those whose fixed rate mortgage agreements have expired,” said Kim Kinnaird, Halifax Housing Loans Director, whose evaluations were included in the statement.
Noting that inflation remains stubbornly high, markets are pricing in a few more rate hikes that will raise the policy rate above 5 percent for the first time since the beginning of 2008, adding that these expectations have caused fixed mortgage rates to start to rise again across the market.
“This will inevitably affect confidence in the housing market as both buyers and sellers review their expectations,” Kinnaird said. Recent industry figures for both mortgage approvals and sales show demand cooling. Therefore, more downward pressure on housing prices is expected.” made its assessment.
Annual inflation in the UK, which was 10.1 percent in March, declined less than expected to 8.7 percent in April. This, in turn, strengthened expectations that the Bank of England (BoE) would have to raise interest rates again.
Following the April inflation data, financial institutions reduced their mortgage loan offers and adjusted rates in May.