“We had the price momentum of purchasers who had already committed to lower mortgage rates in January through the month of February. Prices have decreased, and that is now fizzling out,” she stated.
During the COVID epidemic, UK interest rates reached all-time lows. However, the Bank of England started hiking rates around the end of 2021 in an effort to maintain control over inflation, or the pace at which prices increase.
As a result, mortgage rates started to rise as well, raising the cost of borrowing money to purchase a home.
As anticipation mounted that the Bank of England would start reducing interest rates this year, mortgage rates peaked in the summer of last year and started to decline.
As a result, the housing market began to pick up steam. According to Bank of England data released earlier this week, February witnessed the greatest number of mortgage applications since September 2022.
However, the Bank of England’s potential to not lower rates as swiftly as some had anticipated has caused mortgage rate reductions to stagnate, and some lenders have even raised mortgage rates.
“The housing market remains sensitive to the scale and pace of interest rate changes, and with only a modest improvement in affordability on the horizon, this will likely limit the scope for significant house price increases this year,” stated Kinnaird.
Halifax’s statistics on house prices is derived from its own mortgage lending, which excludes buyers who buy properties for cash or those involved in buy-to-let agreements. Approximately one-third of home sales are to cash purchasers.
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