Mini-Budget Causes House Prices To Fall
House prices have begun to fall after months of steep growth, which could be the result of the government’s mini-budget causing interest rates to soar.
Halifax’s House Price Index reported there was a monthly decline of 0.4 per cent in October, following a 0.1 per cent drop in prices the preceding month. This means the average price for a house in the UK stood at £1,500 cheaper in October than in August.
According to director of Halifax Mortgages Kim Kinnaird, this could be due to the government’s fiscal changes at the end of September.
While it introduced stamp duty cuts, which was intended to make it easier for people to get on the property ladder as they did not have as much tax to pay, not all its economic changes had a positive impact on the market.
For instance, there has been a “sudden acceleration in mortgage rate increases” since the mini-budget. Subsequently, this has made it hard for property buyers and homeowners to afford their mortgage, and meant providers have had to take a lot of their products off the market.
Indeed, Moneyfacts recently revealed the rate for a two-year fixed home loan rose to a 14-year-high at 6.53 per cent, which has not been seen since August 2008.
“Industry data shows mortgage approvals and demand for borrowing [is] declining,” Ms Kinnaird stated, adding: “[The fiscal measures] encouraged those with existing mortgages to look at their options, and some would-be homebuyers to take pause.”
However, Ms Kinnaird recognised that house prices are unlikely to drop dramatically, as a lack of homes on the market and good employment levels will prevent this.
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