Winter tipping point for mortgage holders, warns expert

Winter tipping point for mortgage holders, warns expert
Karen Noye, mortgage expert at Quilter

Autumn and winter could “prove to be the tipping point” for mortgage holders, an expert has warned.

Karen Noye, mortgage expert at Quilter, has said more stock may appear on the market as people struggle with the cost of living crisis and increased bills.

Noye commented: “Repossessions may increase as people struggle to pay for the increased cost of living and mortgage payments and therefore more stock may find its way onto the market.

"A lack of demand and an increase of stock will have the natural effect of pushing down prices.”

Demand will continue to fall as the UK comes out of the pandemic, according to Noye.

She said: “The pandemic put the housing market into overdrive after the flurry of activity, which was at that point based on a change in working habits, the race for space, the stamp duty holiday and ultra-low interest rates. 

“Now that the restrictions of the pandemic have eased and working habits have bedded in, people’s immediate desire to move has abated.”

Noye suggested that as housing demand decreases due to these factors, prices would follow suit

Earlier in August, the Halifax house price index gave the first sign in 13 months that house prices were decreasing. 

According to the index, house prices have decreased by 0.1 per cent in July 2022, the first decline since June 2021. 

As reported by FTAdviser, rising borrowing costs and high price-to-income ratios have put a strain on household budgets causing this decrease in housing demand and price.

While housing prices have increased over the past 13 months, a decline like this has been anticipated.

At the time Halifax published its latest index, the bank's managing director Russell Galley said: “While we shouldn't read too much into any single month, especially as the fall is only fractional, a slowdown in annual house price growth has been expected for some time.

”That said, some of the drivers of the buoyant market we’ve seen over recent years – such as extra funds saved during the pandemic, fundamental changes in how people use their homes, and investment demand, still remain evident."

Lucy Evans is interning with FTAdviser