Housing Market Update - June 2023 🏡

The recent interest rate increase has a lot of people confused, we've broken it down for you.

Georgia Cave
Marketing Manager

👀 It’s been a tumultuous time for the housing market recently, with the 22nd of June confirming that The Bank Of England raised interest rates by 0.5 percentage points, taking the base rate to 5%. 

🔑 Late last week the government confirmed that there would be no extra financial help for buyers during this interest rate hike, instead suggesting buyers ride out what will potentially become the ‘new normal’.

📰 The sensationalist nature of British tabloids means that many buyers have been instantaneously put off by headlines about interest rates, however, it’s not all doom and gloom. 

💰 As Russell Quirk rightly points out in Property Industry Eye, mortgages have been rigorously stress-tested over the past few years, most of the time testing to 5 or even 7%. Whilst for many people the thought of actually hitting that threshold is scary, they should (in theory) be able to make their repayments. 

❓ So how does this affect each group of homeowners? 

Those with fixed-rate mortgages won’t notice a difference immediately, however for the 1.8 million people estimated to be renewing their mortgage this year, there will be a jump compared to when they potentially signed at around 2%. 

For those on a tracker or standard variable rate (SVR) mortgages, the difference is felt instantly, however for most people they’re looking at an average of £47 a month (The Guardian). 

❓ What rates are now available post-announcement?

The Furness Building Society was offering the cheapest two-year fixed-rate mortgage at 4.43%, aimed at buyers looking to borrow 80% of the property’s value. The Leeds Building Society had the cheapest five-year fix at 4.92%. 

First Time Buyer? If you’re looking at a £200,000 home with a £20,000 deposit, the Hinckley & Rugby building society had the cheapest two-year fix at 4.79%. Looking for the current cheapest five-year deal? That would be the 5% Nationwide building society fixed. 

🏡 What does this mean for home sellers? 

Buyer demand is still high. Whilst the usual summer slowdown may have happened a bit earlier due to recent events, buyers are still very much looking to move. Rightmove’s June House Price Index showed buyer demand over the last two weeks is 6% higher than the same period in 2019’s ‘normal’ market.

With rents increasing up to 10% on last year, many tenants are seriously looking at buying as in many cases they are paying less with a mortgage than they are renting. 

Are you looking to buy or sell? Not sure who to trust or what to believe? Whether you want a comprehensive market analysis or an up-to-date home valuation, contact us below. 

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If you’re interested in selling smarter, get in touch today. Nested.com - The modern way to move.