House price inflation continued to slow in September, with prices rising 9.5 percent for the year compared with a 13.1 percent rise in August, according to the latest data from the Office for National Statistics. .
However, month to month house prices did not change. The average UK house was worth £295,000 in September 2022, £26,000 more than this time last year, but unchanged from August.
The figures are based on sales prices in the Land Registry and therefore take into account property sales that were agreed at a time when mortgage rates had already started to rise during the summer, but before that mini-budgets caused big jumps and turbulence.
Explaining the figures, the ONS said the annual percentage change slowed this month because UK house prices rose sharply in September 2021, which coincided with changes to stamp duty land tax. .
House price growth fell to 9.5% in September from 13.1% in August, according to the ONS
In October last year, the zero rate band returned to its previous level of £125,000 from £250,000 after the Government increased tax relief on purchases to support the market during Covid-19.
It meant the maximum £2,500 stamp tax savings that homebuyers enjoyed between July and September 2021 was removed. Previously, they had been able to save up to £15,000 between July 2020 and the end of June 2021.
However, while house prices continue to be supported by a lack of homes coming to the market, many expect prices to decline over the next year in the face of rising mortgage rates and difficult economic conditions.
In October, CPI inflation rose to 11.1 percent, above forecasts of around 10.7 percent, increasing pressure on household finances.
Also, while mortgage rates are beginning to fall, they are still significantly higher than they were at the start of the year.
Before the mini-budget on Friday, September 23, the average two-year fixed rate across all loan-to-value tranches was 4.74 percent and the five-year fixed rate was 4.75 percent, according to Moneyfacts.
The rates stood at 6.28 percent and 6.07 percent respectively as of November 14, both having fallen slightly from their peak of more than 6.5 percent in October.
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Fixed-rate mortgages have started to fall since last month after rising sharply
Jeremy Leaf, North London estate agent and former chairman of the RICS residential board, says: ‘The most comprehensive of all housing market surveys, though a bit dated, confirms what we are seeing in the end.
‘Prices continue to be supported by out-of-stocks as buyers look to take advantage of competitive mortgage rates before the mini-budget fallout pushes them higher.
“However, concerns about further increases in inflation and the potential implications of the Autumn Statement are contributing to a reduction in new business.”
Nathan Emerson, CEO of real estate industry body Propertymark, added: “Things are changing and our members are seeing a steady shift towards a buyers’ market with the highest proportion of sales now being agreed to at sale price or under”.
“Demand continues to outpace supply, and despite buyers negotiating harder with higher loan rates to consider, realistically priced homes are still selling.”
Estate agency Savills has forecast house prices to fall 10% next year before rising 1% in 2024. In May, the estate agency forecast a fall of just 1% in 2023, but the sharp rise in Mortgage rates has led to a bleaker picture.
Rents rise almost 4% in one year
However, as house prices cooled, private rental prices paid by UK tenants rose 3.8 per cent in the 12 months to October 2022, according to separate ONS data. The increase is higher than 3.7 percent in the year through September.
The Association of Housing Rental Agents has reported that the demand for real estate continues to increase, as do rental prices. The supply of homes available for rent has not increased in the last four months.
Private rentals rose 3.8% across the UK in the 12 months to October 2022
Nicky Stevenson, managing director of the national group of estate agents Fine & Country, said: ‘Now all eyes will be on Chancellor Jeremy Hunt’s Autumn Statement, which is expected to include tax increases and spending cuts.
“Changes to capital gains tax breaks could have an adverse impact on the buy-to-let sector at a time when many homeowners are already exiting and potential new entrants are finding that the benefits no longer outweigh the uncertainty.
“A retreating private rental sector would mean a deepening housing crisis in all regions and a rent spiral for tenants.”
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed-rate agreement is coming to an end, or because they have agreed to purchase a home, have been urged to act but not panic..
Banks and building societies continue to lend and mortgages are still being offered and applications accepted.
However, rates are changing rapidly and there is no guarantee that the deals will last and not be replaced by mortgages that charge higher rates.
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What if I need to re-mortgage?
Borrowers should shop around and talk to a mortgage broker and be prepared to act to secure a rate.
Anyone with a fixed-rate agreement ending within the next six to nine months should consider how much it would cost to remortgage now and consider closing a new agreement.
Most mortgage deals allow fees to be added to the loan and are then only charged when you withdraw. By doing this, borrowers can lock in a rate without paying expensive setup fees.
What if I am buying a house?
Those with agreed home purchases should also aim to lock in rates as soon as possible, so they know exactly what their monthly payments will be.
Homebuyers should be careful not to overstretch themselves and be prepared for the possibility of house prices falling from their current high levels, due to higher mortgage rates limiting people’s borrowing capacity.
How to Compare Mortgage Costs
The best way to compare mortgage costs and find the deal that’s right for you is to talk to a good broker.
You can use our best mortgage rate calculator to display offers that match your home value, mortgage size, term, and fixed rate needs.
Keep in mind, however, that rates can change quickly, so the advice is if you need a mortgage, compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you. .
> Consult the best fixed-rate mortgages that you could apply for
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