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Falling inflation and energy bills ease pressure on household finances, amid rising rent and mortgage costs

June 13, 2024June 13, 2024 interestratesinfo

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However, signs of optimism are emerging owing to falling inflation and energy prices, and increased spending on home improvement shows indicators of recovery for the sector.

Barclays Property Insights data shows that the cost of rent and mortgages continued to accelerate in May, with a 6.3 per cent increase year-on-year. Meanwhile, consumer confidence has taken a knock as Brits also started to feel the impact of rising household bills, such as broadband and council tax.

Some comfort is being taken from the latest inflation figures, with six in 10 (62 per cent) saying the slowdown has made them more able to live within their means, and a similar proportion (56 per cent) feel more confident in their household finances. Meanwhile, confidence in the strength of the UK housing market rose slightly last month from 25 per cent to 27 per cent.

Despite increased housing costs when compared to 2023 figures, the month-on-month difference was marginal (-0.01 per cent), indicating that consumers may not be feeling worse off in the short term, particularly in light of the decrease in the Ofgem energy price cap in April which led to consumer spending on utilities falling -12.5 per cent in May.

What’s the outlook for the rental market for the rest of 2024?

June 13, 2024June 13, 2024 interestratesinfo

The rental market is on track for a slowdown in rental growth to 5% in 2024. This is being driven by changes in demand and affordability, rather than any expansion in supply which should be a key focus area for any incoming government, according to Zoopla.

While a general election means the Rental Reform Bill failed to make it to the statute books, rental reform is still needed in the rental sector to improve the protections for existing renters.

The big policy focus of a new government should be on boosting the stock of homes for rent – both private and affordable – through increased housing delivery supported by additional funding and reforms to the planning system. Zoopla says this is the best option to improve the choice for renters and improve the quality of homes for rent. It’s important political parties set out specific policies to support the private rented sector in manifestos.

Housing market ‘primed to surge’ after election as interest rate cuts come into view

June 13, 2024June 13, 2024 interestratesinfo

The UK’s prospective home buyers and sellers are in ‘wait-and-see’ mode as house prices held steady in May amid uncertainty about the general election and interest rates outlook, new figures show.

But experts predicted a surge in demand could be on the way soon, once the general election is out of the way and interest rates start falling.

The latest House Price Index from the country’s biggest mortgage lender Halifax shows that the average house price across the UK ticked down by just £170 in May. A number of estate agents reported quieter activity in what is traditionally a busy month for property moves.

The average house price across the UK came to £288,688, close to flat month-on-month and up 1.5% from last May. In London, prices were close to flat year-on-year, with the average home costing £536,821. With average wages growing by 6% year-on-year, according to the ONS, the figures suggest properties are getting more affordable.

Mortgage arrears surge 45% in a year as reality of rate hikes sets in

June 13, 2024June 13, 2024 interestratesinfo

The amount of arrears on mortgages ballooned 44.5 per cent in the first three months of this year as homeowners struggle with higher rates, Bank of England data has revealed.

Outstanding arrears increased to £21.3billion, up 4.2 per cent compared to the final three months of 2023 and up 44.5 per cent compared to the first three months of that year.

It is the highest total amount of arrears recorded since 2014.

Homeowners coming to the end of fixed-term deals agreed when rates were much cheaper and needing to remortgage continue to face payment spikes.

Separate research released today by rates monitor Moneyfacts Compare suggests those who are coming to the end of a five-year fix this month can expect to see the interest they pay almost double, with average rates rising from 2.85 per cent then to 5.5 per cent now.

Santander Bucks Recent Trend With Purchase, Remortgage Rate Cuts – Forbes Advisor UK

June 13, 2024 interestratesinfo

Santander has cut selected fixed rates for residential purchase and remortgage, in welcome news for borrowers looking for a new home loan.

The bank, the fourth largest mortgage lender, has cut its five-year fixed rate with a £999 fee for home purchase from 4.38% to 4.28%, for buyers with at least a 40% cash deposit (60% loan to value).

Its two-year fixed rate for purchase with a £999 fee has been cut from 5.18% to 5.11% (85% LTV).

The bank’s purchase deals for new build properties have also been reduced. For example, it is now offering a deal at 95% loan to value at 5.87%. The deal has no fee and pays £250 cashback on completion.

In addition, the 95% LTV three-year new build fixed rate with no product fee and £250 cashback is 5.87%, down from 6.01%.

The rate cuts come as other lenders have been increasing their fixed rates (see stories below). This is because the market increasingly feels the Bank of England won’t cut interest rates when its Monetary Policy Committee (MPC) meets on 20 June.