Rising mortgage rates sends demand for homes down 18 per cent, new data shows
Rising mortgage rates has reduced demand for homes by 18 per cent, Zoopla’s latest House Price Index revealed today.
This weaker demand, coupled with rising supply, saw UK house price growth shrink to 0.6 per cent for June, down from 9.6 per cent for the same month last year.
The estate agent said it expects house prices to be 5 per cent lower by the end of the year, but still 15 per cent above pre-pandemic levels.
“The impact of higher mortgage rates is far from uniform across the country,” Richard Donnell, executive director at Zoopla said.
“It all depends on housing affordability in local housing markets. Activity levels and prices in Southern England have been hit hardest by higher borrowing costs while the most affordable parts of the UK continue to see prices rising slowly,” he added.
Last month, mortgage rates skyrocketed to 6.66 per cent after the Bank of England raised interest rates for the 13th consecutive time in a row to five per cent.
However, high street banks said this week they would look at reducing rates on their mortgage deals.
“Nationwide reducing fixed rates up to 0.35 per cent and tracker rates 0.20 per cent on switcher and additional borrowing rates is positive for existing customers,” Darryl Dhoffer, a mortgage advisor from The Mortgage Expert, said.
“No surprise they are being hesitant on new borrower deals, and, until we see what the Bank of England rate decision will be and the effect on subsequent inflation figures and SWAP rates, only then will we be able to see any trends on other lenders following suit,” he added.