HOMEBUYERS pressurised into using estate agents’ mortgage services face being “ripped off”, warn experts as cases of conditional selling rise.
Conditional selling, banned under industry regulations, happens when estate agents try to strong-arm or incentivise buyers to use their mortgage broker.
Buyers who refuse are told it could affect their chances of securing the property.
It’s an underhanded practice that has been around for a long time say brokers. But recently it has become more widespread.
If persuaded, buyers could wind up paying too much for their mortgage, for the property and for extra services such as insurance and legal work.
Sun Money explains how to spot signs of pressure selling and what you can do to avoid it.
Rise in pressure selling
In a quieter housing market, like the one we’re in now, more estate agents are likely to try to coerce customers into using more of their services such as mortgage broking, say independent advisers.
Rowan Frayling, managing director of J Finance, said: “This year, almost all my team of nine brokers have experienced this issue.
“I personally have had four cases. Our customers are being told by the agent that they cannot put their offer to the seller until they’ve met with their own broker to be verified.”
A recent survey by brokerage Access Financial Services which has 150 advisers revealed that 63% said they’d experienced conditional selling and in all these cases the borrowers suffered stress, hassle or confusion.
Other sneaky house sales tactics
Look out for these sales tricks to hook you in:
Tactic: You’re offer cannot be forwarded to the seller unless you use the agent’s in-house broker.
Truth: Under the Estate Agents Act 1979 all offers must be passed on to the seller.
Tactic: You’re offer will be looked upon more favourably if you use the agent’s broker and conveyancer.
Truth: Agents are not allowed to discriminate against a buyer by misrepresenting their offer to the seller or passing it on less quickly than others.
Tactic: Before you can view a property we need to verify your income to avoid disappointment.
Truth: The agent is entitled to confirm to the seller you can afford to make an offer but your own broker can provide a certificate as proof.
Tactic: Only our agency has access to the cheapest rates on the market.
Truth: This isn’t likely. Agencies often work with a limited number of lenders. Ask for a list.
Risk of being “ripped off”
Buyers who bow to the pressure of using the agent’s broker face the possibility of paying over the odds for their mortgage and insurances.
“Consumers risk being ripped off,” said Nicholas Mendes, mortgage technical manager for broker John Charcol.
Some large estate agencies tempt buyers with the promise of the cheapest rates on the market stating they have exclusive tie-ups with mortgage lenders.
This may be true, but so do mortgage brokers.
The estate agent’s broker is often only allowed to offer mortgages from a few lenders, called a panel.
Your own broker typically has the pick of the whole market, but check that is the case.
Mr Mendes added: “Buyers who have had past credit problems, for example, could find they are offered an uncompetitive rate if the in-house broker works with a limited number of lenders.”
Brokers are obliged under financial regulations to provide a list of the lenders they work with if it is a restricted number. Always ask for this upfront.
Chief executive of consumer group HomeOwners Alliance said: “Buyers risk spending thousands of pounds more in interest by not getting the best mortgage rate.
Many of the in-house brokers do not offer deals from every lender in the market and they receive hefty commissions.”
Using in-house brokers also makes it difficult for buyers to haggle over the asking price.
The agent knows exactly how much you can afford to pay for the property once you’ve handed over details of your salary and outgoings.
By keeping your cards close to your chest, you’ll have more bargaining power.
Flouting the rules
Estate agents who engage in conditional selling are breaking the rules of the Estate Agents Act 1979.
Under section 3 of the act, the regulations state that every offer made by a buyer must be passed to the seller within two working days of being received.
The rules state that agents must not discriminate against a buyer by misrepresenting their offer to the seller or passing it on less quickly than others.
Agents are allowed to check you can afford to back up any offer you make.
You can satisfy this check by producing your Agreement in Principle (AIP), the certificate from your own broker that confirms you’re mortgage ready.
You do not have to pass another financial assessment.
James Munro, senior manager of the National Trading Standards Estate and Letting Agency Team, said: “We view conditional selling as unacceptable and are aware that it is a significant problem that can cause considerable financial loss and emotional turmoil to buyers.
“It is crucial for us that people report any misconduct or manipulation of the offer process.”
What can buyers do?
There’s lots you can do to protect yourself from pressure selling.
Do your research – get an idea of the mortgage rates you’re eligible for and understand what could affect your rate such as the size of your deposit, being self- employed or having past credit problems.
Be prepared – ask your own broker to check you’re eligible for a mortgage and get an AIP to prove you can afford the maximum you are prepared to pay.
When you make an offer by email, attach your AIP and your solicitor’s details.
Quote the regulations – you are less likely to be pressured if you’re clued up on the rules.
Complain to Citizens Advice Consumer Service and either The Property Ombudsman or the Property Redress Scheme, whichever body your agent is a member of.
You must also notify the agent of your actions.
Nathan Emerson, chief executive of Propertymark, the estate agent trade body, said: “Buyers should never be denied progression within the home buying or selling process due to not choosing an agency’s specific mortgage adviser.
“We encourage anyone who has or is experiencing this behaviour from an agent to follow correct procedures and make the appropriate industry acting bodies aware of the situation.”
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![Average house prices dropped by ‘more than usual’ in July - here’s why](https://ukpropertyguides.com/wp-content/uploads/2024/07/Average-house-prices-dropped-by-‘more-than-usual-in-July.png)
The average asking price for a home in Britain reportedly saw a greater than usual decrease for July, according to property website Rightmove.
The report noted that the typical new seller asking price fell by 0.4 per cent, or £1,617, from June to July, bringing the average price down from £375,110 to £373,493.
Larger Drop Than Usual
This decline was steeper than the typical July decrease, which has averaged 0.2 per cent over the past 20 years.
The website attributed this larger drop to new sellers trying to attract buyers amidst distractions from the General Election, various sporting events, and the summer holiday season.
Sales and Market Activity
Despite the price drop, Rightmove noted that both the number of sales being agreed and the number of new sellers entering the market were higher compared to the same period last year.
Market Outlook
Tim Bannister, Director of Property Science at Rightmove, commented on the market’s prospects: “Three major uncertainties hanging over the property market at the start of the year were when the first interest rate cut would be, and the timing and the result of the General Election.
“We’ve now got the political certainty of a new Government with a large majority, which we expect will help home mover confidence.
“It’s very early days, but the new Chancellor’s immediate announcements on housebuilding targets and planning reform are positive signs that the Government is keen to get going with its manifesto pledges.”
Future Expectations
Bannister added: “A base rate cut is expected to lead to lower mortgage rates, which could be the game changer for some would-be home movers who are being held back by significantly higher monthly mortgage costs.
“The average five-year fixed rate is still nearly twice as high as it was before the first of 14 consecutive Bank of England rate increases in 2021, with rates staying elevated for much longer than many thought that they would.
“A first base rate cut for over four years, together with the new political certainty, could set the scene for a positive autumn market, with improved affordability and a more confident outlook in the second half of the year.”
Industry Perspectives
Matt Nicol, Managing Director at estate agent Nicol & Co in Worcestershire, noted: “Valuations and instructions remain strong, backing up the historical data that shows elections have minimal market impact.”
Nathan Emerson, CEO of property professionals’ body Propertymark added: “Any slight dip in house prices is likely to only be a temporary phase following a period of uncertainty triggered by the recent General Election.”
TWO popular summer garden features could be knocking thousands of pounds off the value of your house without you realising.
With house sales still relatively slow, it’s more important than ever that sellers make their homes as desirable as possible for potential buyers.
House prices have remained relatively flat over the past year, but experts believe the property market will pick up following the general election and with rate cuts expected later this year.
With that in mind, homeowners keen to sell up should be wary of two popular summer garden features that could actually have a negative impact on the value of their property.
Garden ponds and swimming pools may be lovely during the warmer months, but they can actually wipe a combined £60k off the price of an average home, experts have warned.
A swimming pool could knock as much as 20% off your house price, equating to a hefty £55,000 penalty, according to Ruth Beeton, co-founder of Home Sale Pack.
Meanwhile, a pond is estimated to damage your home’s value by around 1.8%, which equates to around £5,000 off the average property price of £281,000, according to Office for National Statistics data.
“When it comes to the value of a property, it’s important to remember that potential buyers won’t necessarily view some features as positively as you might,” Ms Beeton said.
“Ponds and pools are a great example of this as both pose a potential safety risk, particularly for children.
“They also require a degree of maintenance, which requires time and money, and ponds can also attract rodents such as rats and mice.”
A pool typically costs £45 to £85 in labour per month to keep maintained, according to Checkatrade.
And these water features can be expensive to get rid of, too – which means either you’ll have to fork out or your buyer will be factoring the cost in – something to consider before taking the plunge and building one.
What if I have a pond or pool and want to sell?
If you do have one of these features, don’t panic.
First, remember that some people will actively be looking for these features – you might just appeal to a smaller market.
Ms Beeton said it’s important to ensure your home looks its “absolute best” when you market it online so potential buyers aren’t put off, or may even see the features as a positive.
For example, make sure you emphasise if they are not too deep or are easy to clean, and make the surrounding area look attractive on photos.
“The other option is to remove it altogether – although while this can be fairly straightforward when it comes to ponds, removing a pool can be an expensive endeavour,” Ms Beeton said.
To fill in your pond, a landscaper will typically charge between £110 and £180 per day, according to Checkatrade.
And you can expect to pay around £85 per tonne for topsoil.
However, the price of this can vary depending on the size of your pond and the local rates.
Meanwhile, removing a swimming pool can cost upwards of £10,000, although this will depend on the size of the pool.
It’s not just ponds and pools that can devalue your home.
We previously reported that conservatories could actually become unpopular with younger buyers and could be knocking £15k off a typical house price.
Meanwhile, brown, unpainted Pebbledash on your external walls could be reducing the value by £28,469 and poor parking options, or none at all, can also slash your asking price by £19,359.
You can read our full list of de-valuing features here.
BEFORE YOU MAKE THE PLUNGE….
SWIMMING pools and ponds, while offering luxury and leisure, can sometimes deter potential buyers and even decrease your home’s value.
Experts at Open Property Group told The Sun why you should think twice about adding the feature to your garden.
Upfront and Ongoing Costs:
- Installation: Pools and ponds require a significant initial investment. Depending on size, design, and materials, these costs can be substantial.
- Maintenance: Both pools and ponds require regular upkeep, including chemicals, cleaning equipment, and potential repairs. This translates to ongoing expenses for buyers.
- Heating (Pools): Especially in cooler climates, heating a pool adds to the monthly running cost, which might be a turnoff for some.
Limited Appeal:
- Niche Market: Not everyone enjoys swimming or having a water feature in their backyard. This limits the pool of potential buyers interested in your property.
- Safety Concerns: Families with young children might be wary of the safety hazards associated with pools.
- Time Commitment: Maintaining a pool or pond takes time and effort, which some buyers might not be willing to invest.
Reduced usable garden space:.
While swimming pools and ponds can enhance your enjoyment of a property, they might not be universally appealing to buyers.
How to boost the value of your home
If you are keen to sell your home, there are number of features which buyers are attracted to that could boost your value.
According to Open Property, the below features may help:
- An extension
- A home gym
- A home office, or other garden rooms – as long as there is space in your garden
- Open plan rooms with kitchen/living areas for socialising and being the heart of the home
However, sprucing up your home before selling doesn’t have to cost the earth.
“Think of quick wins that could make your home more attractive such as clearing your garden, giving your front door a fresh lick of paint, polishing your letterbox or power washing your entrance,” Daniel Copley, consumer expert at Zoopla told The Sun.
He added: “When it comes to the interior of your home, focus on clearing out any clutter from high-traffic areas like your kitchen or living room.”
Mr Copley also said that sellers should focus on the opportunities in your home to improve its value.
“For example, could you easily upgrade elements in your bathroom like taps and shower fixtures, or improve your home’s EPC rating by installing solar panels,” he explained.
What is going on with housing market?
The property market has seen a slow down over the past few years because mortgage rates have significantly increased, putting off first-time buyers and meaning homeowners are reluctant to move.
However, markets expect the Bank of England to cut its base rate in August this year after policymakers kept it at 5.25% in June.
This is important for buyers because high street banks and lenders use the BoE base rate to set their own interest rates on mortgages, loans and savings accounts.
So, if the base rate comes down, interest on mortgages rates and loans is likely to fall as well.
The number of people selling their home is now set to rise this year.
Zoopla expects 1.1m homes to be sold in 2024 – 10% more than in 202.
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IF you are looking to sell your home, then you’ve come to the right place.
Or if you’ve just spent ages decorating and want to show off your space to family and friends, then we’ve got just the thing for you.
Particularly if you’ve got a small home, but want it to appear bigger than it actually is, thanks to the help of a savvy estate agent, you won’t need to look any further.
On a recent respide of Joe Marler’s Things People Do, a podcast where the professional England rugby player is accompanied by Tom Fordyce, a sports journalist and author, the duo spoke to James, an estate agent from the UK.
James revealed the tricks estate agents use that make properties look bigger than they actually are in pictures – and it’s much simpler than you might imagine.
During the ‘Classic: About Estate Agents’ episode, the estate agent explained: “I left school and went into an estate agency.
“I love it, it’s phenomenal.”
And if your home is small but you’re desperate for it to appear larger in pictures, James shared his top tip.
When asked: “When you’re doing the photos, how do you make small rooms look bigger than they actually are?”, James responded: “Wide angle lens, but not too wide, because otherwise it fisheyes and you end up with wonky lines.”
Not only this, but the estate agent suggested that even the camera on an iPhone can do the trick.
He continued: “Or even the iPhone Pro, it takes three pictures and merges them into one.
“It’s about playing with the angles to show off a space.”
Not only this, but James also highlighted the importance of using high-angle shots.
He expressed that this works particularly well for large properties with lots of space and land.
Trends interior designers hate
IF you want to ensure that your home looks glam, here are the trends that interior designers can’t stand.
NO YELLOW: According to Bilal Rehman, yellow paint in a bedroom is a big no no.
He said: “If you want everyone to know you’re a horse girl then yellow is perfect for you.”
SIGN OFF: Kelly Hoppen shared her honest thoughts on Live, Love, Laugh signs.
The interior pro explained: “Another gripe of mine – Live, Laugh, Love – those kinds of wooden things that sit on book shelves and floating shelves, that’s so 10, 12, 15 years ago.”
NO GREY YAY: Julie Provenzano explained that grey interiors have been overdone.
She stressed: “We took a good thing and we overdid it to the point that it now feels copy, paste, basic.”
He revealed that when advertising a home, “elevated” shots are best.
The estate agent advised: “Try and get a drone out or a camera pole.
Interior Design expert advice
“Show the space around.”
James recognised that whilst this may not be effective for a small bedsit, if you’re lucky enough to have a home with a big garden, this trick is worth a try.
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He concluded: “It doesn’t quite work if you’ve got a little one bed starter home, but if you’ve got a bit of land around – perfect.”
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![Housing prices rise despite more supply: Here's why](https://ukpropertyguides.com/wp-content/uploads/2024/07/Why-home-prices-are-still-rising-even-as-inventory-recovers.jpg)
Anyone out shopping for a home today knows there is still precious little for sale.
The housing market is just beginning to come out of its leanest few years in history. Inventory of both new and existing homes is finally rising, but there is something suddenly strange in the numbers: The supply of newly built homes appears to be way too high.
The numbers, however, are deceiving due to the unprecedented dynamics of today’s housing market, which can be traced back two decades to another unprecedented time in housing, the subprime mortgage boom.
All of it is precisely why home prices, which usually cool off when supply is high, just continue to rise.
The supply scenario
There is currently a 4.4-month supply of both new and existing homes for sale, according to the National Association of Home Builders, or NAHB. Months’ supply is a common calculation used in the market to measure how long it would take to sell all the homes available at the current sales pace. A six-month supply is considered a balanced market between a buyer and a seller.
Supply was already low at the start of this decade, but pandemic-driven demand pushed it to a record low by the start of 2021 at just two-months’ supply. That shortage of homes for sale, combined with strong demand, pushed home prices up more than 40% from pre-pandemic levels.
Now supply is finally beginning to climb back, but the gains are mostly in the new home market, not on the existing side. In fact, there is now a nine-month supply of newly built homes for sale, nearly three times that of existing homes. New and old home months’ supply usually track pretty closely. New construction now makes up 30% of total inventory, about twice its historical share, according to the NAHB.
Single-family homes in a residential neighborhood in San Marcos, Texas.
Jordan Vonderhaar | Bloomberg | Getty Images
“June 2022 recorded the largest ever lead of new home months’ supply (9.9) over existing single-family home months’ supply (2.9),” wrote Robert Dietz, chief economist for the NAHB. “This separation makes it clear that an evaluation of current market inventory cannot simply examine either the existing or the new home inventory in isolation.”
This unusual dynamic has been driven by both recent swings in mortgage rates and an unprecedented disaster in the housing market that began 20 years ago.
The foundation of today’s tricky numbers
This housing market is unlike any other because of economic forces unlike any other. First, in 2005, there was a massive runup in home sales, homebuilding and home prices fueled by a surge in subprime mortgage lending and a frenzy of trading in new financial products backed by these mortgages.
That all came crashing down quickly, resulting in one of the worst foreclosure crises since the Great Depression and causing the ensuing Great Recession. Single-family housing starts plummeted from a high of 1.7 million units in 2005 to just 430,000 in 2011. By 2012, new homes made up just 6% of the total for-sale supply and, even by 2020, housing starts had yet to recover to their historical average of about 1.1 million units. They sat at 990,000.
Then came the Covid-19 pandemic and during that time, consumer demand surged and mortgage rates set more than a dozen record lows, so builders responded. Housing starts shot up to 1.1 million in 2021. The Federal Reserve was bailing out the economy, making homebuying much cheaper, and the new work-from-home culture had Americans moving like never before. Suddenly, supply was sucked into a tornado of demand.
Mortgage rate mayhem
The current strange divide in supply between newly built and existing homes is also due to roller-coaster mortgage rates, dropping to historic lows at the start of the pandemic and then spiking to 20-year highs just two years later. Millions of borrowers refinanced at the lows and now have no desire to move because they would have to trade a 3% or 4% rate on their loans to the current rate, which is around 7%. This lock-in effect caused new listings to dry up.
It also put builders in the driver’s seat. Homebuilders had already ramped up production in the first years of the pandemic, with single-family homes surging to more than 1.1 million in 2021, according to the U.S. census, before dropping back again when mortgage rates shot up. Builders have been able to buy down mortgage rates to keep sales higher, but as of this May, they are building at an annualized pace of 992,000.
Resale listings improved slightly this spring, as mortgage rates fell back slightly, and by June, active listings were 16.5% higher than they were the year before, according to Redfin. Some of that increased supply, however, was due to listings sitting on the market longer.
“The share of homes sitting on the market for at least one month has been increasing year over year since March, when growth in new listings accelerated, but demand from buyers remained tepid, as it has been since mortgage rates started rising in 2022,” according to a Redfin report.
A home available for sale is shown in Austin, Texas, on May 22, 2024.
Brandon Bell | Getty Images
Growth at the low end
On the resale market, the supply is lowest in the $100,000 to $500,000 price tier, according to the National Association of Realtors. That is where the bulk of today’s buyers are. Higher mortgage rates have them seeking cheaper homes.
Interestingly, however, while supply is increasing across all price tiers, it is increasing most in that same lower-end price tier, meaning it is simply not enough. As fast as the homes are coming on the market, they are going under contract.
For example, there is just a 2.7-month supply of homes for sale between $100,000 and $250,000, but supply is up 19% from a year ago. Meanwhile, there is a 4.2-month supply of homes priced upward of $1 million, but supply is up just 5% from a year ago.
This explains why home prices remain stubbornly high, even with improving supply. Prices in May, the latest reading, were 4.9% higher than May 2023, according to CoreLogic. The gains have begun to shrink slightly, but not everywhere.
“Persistently stronger home price gains this spring continue in markets where inventory is well below pre-pandemic levels, such as those in the Northeast,” said Selma Hepp, chief economist for CoreLogic.
“Also, markets that are relatively more affordable, such as those in the Midwest, have seen healthy price growth this spring.”
Hepp notes that Florida and Texas, which are seeing comparatively larger growth in the supply of homes for sale, are now seeing prices below where they were a year ago.
While analysts have expected prices to ease and mortgage rates to come down in the second half of this year, it remains to be seen if rates will actually come down and if the supply-demand imbalance will allow prices to cool. If mortgage rates do come down, demand will surely surge, putting even more pressure on supply and keeping prices elevated.
“Yes, inventory is rising and will continue to rise, particularly as the mortgage rate lock-in effect diminishes in the quarters ahead. But current inventory levels continue to support, on a national basis, new construction and some price growth,” Dietz added.
AS voters head to the polls today, it is widely expected that Labour will come out on top.
But what does that mean for house prices now and down the line?
Labour has announced a number of policies around housing, which experts believe could provide a much-needed boost to the stagnant property market.
House prices and transaction volumes have both slowed significantly over the past few years, with the average house price now standing at £281,000, according to the Office for National Statistics – down from £288,000 this time last year.
This has largely been attributed to high mortgage rates pricing out buyers, experts say.
Data from Nationwide released this week found transactions involving a mortgage are down by nearly 25% over the past year.
General elections often don’t help the housing market as people like economic stability.
But experts believe the housing market could be kick-started by Labour government – if it delivers on its promises.
Plus, they added that a new period of political stability with a strong majority government could give households more confidence to buy or sell.
The property market under Labour may also benefit from base rate cuts from the Bank of England (BoE), which are widely expected to kick in later this year.
The BoE voted to keep the base rate at a 16-year high of 5.25% in June, but analysts predict it may be cut at the next decision.
Cutting the base rate would help to bring down mortgage rates, which would ease pressure on households and could encourage more people to buy or sell their homes.
Alice Haine, personal finance analyst at Bestinvest, said: “Throw in some interest rate cuts from the Bank of England, with the first reduction expected as early as next month on August 1, and the market could experience a surge in demand.
“Several major lenders have already begun trimming their headline deals and, with mortgage approvals remaining robust, house prices may improve from here.”
In terms of policies, Labour has promised to build 1.5million homes over five years with the aim of getting more people on the property ladder.
It also pledged that new buyers will get first dibs on properties in new developments before they are sold to overseas investors.
Both of these policies could ease some pressure on the stretched housing market and encourage more first-time buyers to get onto the ladder.
“Long term, Labour’s pledge to build more homes and help first-time buyers via a permanent mortgage guarantee scheme will only help strengthen the market
Marc Von Grundherr
“Building more houses is the most effective way to make property affordable, because it brings supply and demand back into a better balance, and helps younger people get onto the property ladder without having to over-stretch themselves,” Ms Coles explained.
Another promise from Labour in its manifesto was to create a permanent mortgage guarantee scheme, which would see the Government act as a guarantor for people unable to save for large house deposits.
Coupled with a pledge to build more properties, experts said this could help get more people onto the housing ladder, which would be good news for house prices.
Marc Von Grundherr, director of Benham and Reeves, said: “Long term, Labour’s pledge to build more homes and help first-time buyers via a permanent mortgage guarantee scheme will only help strengthen the market – although this is, of course, dependent on these promises actually being delivered.
“While some buyers and sellers may have put their plans on hold until the election dust has settled, we now anticipate the market will continue to move forward on a positive foot and the prospect on an interest rates cut will only fuel market momentum.”
However, a temporary mortgage guarantee scheme already exists – and it hasn’t been hugely popular.
Since its launch in April 2021, the scheme had accounted for just 1.6% of all mortgage completions as of March this year.
Kerr & Watson director and co-founder Stephen Kerr said the low uptake makes him “question its effectiveness.”
“From my perspective, the scheme has faced challenges in gaining widespread adoption,” he said.
So, the permanent scheme may need a shake-up in order for it to be as effective as Labour hopes.
Experts also say Labour’s plans to introduce VAT on private school fees could push up house prices in some areas in the same way that top state schools already do.
“Labour’s plans to introduce VAT on private school fees could see more demand filtering into the state and grammar school systems which may, in turn, increase the house price premiums we already know are evident around high performing state schools,” said Frances McDonald, director of research at Savills.
Different types of mortgages
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We break down all you need to know about mortgages and what categories they fall into.
A fixed rate mortgage provides an interest rate that remains the same for an agreed period such as two, five or even 10 years.
Your monthly repayments would remain the same for the whole deal period.
There are a few different types of variable mortgages and, as the name suggests, the rates can change.
A tracker mortgage sets your rate a certain percentage above or below an external benchmark.
This is usually the Bank of England base rate or a bank may have its figure.
If the base rate rises, so will your mortgage but if it drops then your monthly repayments will be reduced.
A standard variable rate (SVR) is a default rate offered by banks. You usually revert to this at the end of a fixed deal term, unless you get a new one.
SVRs are generally higher than other types of mortgage, so if you’re on one then you’re likely to be paying more than you need to.
Variable rate mortgages often don’t have exit fees while a fixed rate could do.
The average London house price is currently £525,248, reports Nationwide, up 1.6 per cent since this time last year.
Across the UK, house prices rose by just 0.2 per cent month-on-month in June, as high mortgage rates continued to hold back buyer activity, Nationwide reports.
The modest monthly growth leaves the average price of a house in the UK at £266,064, the index by Nationwide Building Society showed, up 1.5 per cent on the same time last year.
Prices rose at a slower rate than in May, when they increased by 0.4 per cent month on month, indicating a slight flattening in growth as the housing market remained subdued.
Wages outpaced by mortgage rates
“While earnings growth has been much stronger than house price growth in recent years, this hasn’t been enough to offset the impact of higher mortgage rates,” said Robert Gardner, Nationwide’s chief economist.
A first-time buyer with a 25 per cent deposit could get a 1.3 per cent interest rate on a five year fixed-rate mortgage in 2021. Now that interest rate is closer to 4.7 per cent.
“Housing affordability is still stretched,” added Gardner. “Today, a borrower earning the average UK income buying a typical first-time buyer property with a 20 per cent deposit would have a monthly mortgage payment equivalent to 37 per cent of take-home pay — well above the long-run average of 30 per cent.”
The total number of transactions is down by about 15 per cent compared with 2019, when prices were at a record high, Nationwide said.
Transactions involving a mortgage are down even more, by nearly a quarter, reflecting the impact of higher borrowing costs, Mr Gardner added, while cash deals are about 5 per cent above pre-pandemic levels.
Buyers wait for base rate fall
Mortgage rates have remained stubbornly high after the Bank of England held the base interest rate at 5.25 per cent for longer than expected during the second quarter.
Earlier this year, economists had expected the Bank to cut rates as soon as May or June, but policymakers voted to hold them amid signs that some inflation indicators had still not fallen as fast as anticipated.
Nationwide’s index also included data for the UK’s nations and regions, showing annual changes during the three months to June.
The figures showed that, within England, house prices rose fastest in the North and the Midlands, which saw combined growth of 2.4 per cent year on year.
Southern England saw a 0.3 per cent fall. London was the best-performing southern region. East Anglia was the weakest-performing region, with prices down 1.8 per cent year on year.
Mr Gardner described it as “a mixed picture, with some regions seeing a modest pick-up in growth, but others still recording annual price declines”.
Northern Ireland remained the best-performing area in the UK, with prices up 4.1% compared with the same period in 2023.
Estate agent Jeremy Leaf, former residential chairman of the Royal Institute of Chartered Surveyors, said: “Early spring optimism all but disappeared when it became apparent that any reduction in mortgage rates would be delayed.
“This reliable indicator of housing market health also shows how the election announcement had little impact on prices or activity and underlines how cash purchases are playing a more important role.
“Now that inflation has started to fall, expectations are growing that the drop in base rate may not be delayed too long after all.”
Amy Reynolds, head of sales at estate agency Antony Roberts, said: “The situation is very concerning for first-time buyers.
“House prices may have come off a little from their post-pandemic highs but this is more of a correction than a fall and home-ownership is still out of reach for many, with high borrowing costs not helping the situation.
“One trend we are seeing is people looking to financially downsize to release capital to live on and pay bills, which is hugely concerning.
“The property market tends to pick up after an election. If this election is followed by an interest rate cut in August, this would set the housing market up nicely for the autumn, dispelling uncertainty and boosting affordability.”
Here are average house prices and the annual house price change, according to Nationwide (the annual change figures compare the three months to June with a year earlier):
Region |
Avg. house price (Q2 2024) |
% annual change |
Northern Ireland |
£190,300 |
4.1 per cent |
North West |
£213,580 |
4.1 per cent |
Yorkshire and the Humber |
£206,653 |
3.8 per cent |
North |
£158,467 |
2.9 per cent |
London |
£525,248 |
1.6 per cent |
West Midlands |
£242,873 |
1.4 per cent |
Wales |
£207,650 |
1.4 per cent |
Scotland |
£181,186 |
1.4 per cent |
East Midlands |
£231,745 |
-0.2 per cent |
Outer Metropolitan |
£418,919 |
-0.5 per cent |
Outer South East |
£331,995 |
-1.1 per cent |
South West |
£301,139 |
-1.5 per cent |
East Anglia |
£270,597 |
-1.8 per cent |
July mortgage interest rates forecast: down slightly
Listening to the Fed
Rate cuts might be nothing to celebrate
What other forecasters predict
What happened in June
July mortgage interest rates forecast: down slightly
Mortgage rates are poised to edge lower in July as inflation cools.
Listening to the Fed
Rate cuts might be nothing to celebrate
What other forecasters predict
What happened in June
A townhouse for sale in the Upper East Side neighborhood of NYC.
Adam Jeffery | CNBC
Some of the heat is coming out of home prices, even though they’re still higher than they were a year ago.
Several new reports show the price gains are shrinking and home sellers are starting to give in after a stagnant spring market.
For the first time since the start of the Covid-19 pandemic, when home sales ground to a halt, the typical house sold for slightly less than its asking price — 0.3% lower — during the four weeks ended June 23, according to real estate brokerage Redfin. A year ago at that time the typical home was selling at list price. Two years ago it was selling at about 2% above list price.
That’s not to say that the housing market is crashing. A little less than two-thirds of homes still sold over asking price in the last month; that is, however, the lowest share since June 2020. While most sellers are still listing their homes at higher prices than comparable homes sold for a year ago, some are conceding that they simply can’t command those prices.
Mortgage rates remain stubbornly high, with the average rate on the 30-year fixed mortgage stuck just above 7% for the third straight month, according to Mortgage News Daily.
The much-watched S&P Case-Shiller index showed home prices in April up 6.3% from April 2023. May’s prices continue that trend. Home prices are now 47% higher than they were in early 2020, with the median sale price now five times the median household income.
CNBC got an exclusive, early look at home price data coming out next week from a different index by ICE Mortgage Technology. It shows annual home price growth slipped to 4.6% in May from 5.3% in April. That is the slowest growth rate in seven months.
Supply is starting to build, which is leading to the cooling in prices. Total active listings are now 35% higher than they were at this time a year ago, according to Realtor.com. To put that in perspective, however, even after the recent growth, inventory is still down more than 30% from typical pre-pandemic levels.
“Some buyers think they can get a deal because they’re hearing the market is cool, and some sellers think every home will sell for top dollar no matter the condition,” said Marije Kruythoff, a Los Angeles Redfin agent, in a release. “In reality, everything depends on the house and the location.”