UK house price growth stalls – What it means for your mortgage
Key Points
- UK house price growth stalled in June with a 0.0% monthly change
- Annual growth edged up to 2.2%, from 1.7% in May
- Mortgage approvals and borrowing fell in May
- Large mortgage rate falls are unlikely in the near term
- Lender competition could open opportunities for remortgagers
UK house price growth stalled in June, and homeowners approaching a remortgage are being urged to review their options and seek advice early.
House prices were flat month on month, with a 0.0% change, while annual growth edged up to 2.2% from 1.7% in May, according to the latest Nationwide house price index. The average UK home was valued at £277,484.
Ian Futcher, financial planner at Quilter, noted that a lengthy run of fluctuating mortgage rates had left households reluctant to move until borrowing costs settled.
Rate falls unlikely soon – but competition could help
Futcher said significant falls in mortgage rates were unlikely to materialise for some time, though competition between lenders could create openings for borrowers.
“While significant falls in mortgage rates are unlikely to materialise for some time yet, competition between lenders could create some opportunities. For buyers and homeowners approaching a remortgage, reviewing options and seeking advice early will help put you in a stronger position as the market continues to adjust.”
Futcher’s caution reflected wider signs of a cooling market. Property transactions edged lower in May, while Bank of England figures showed weaker mortgage borrowing and fewer approvals for house purchases.
Robert Gardner, Nationwide’s Chief Economist, said mortgage approvals fell noticeably in May and that consumer confidence and housing sentiment had weakened.
He said a shift in market expectations for the future path of Bank Rate had helped bring down the market interest rates that underpin fixed-rate mortgage pricing, and that easing energy costs could reduce the pressure on the Bank of England to raise rates.
Gardner said that if those trends were maintained, they would help restore household confidence and ease affordability constraints, paving the way for a recovery in housing market activity in the coming quarters.
