Crunch Time as House Prices Fall 4% and Mortgage Rates Rise

Published / Last Updated on 01/05/2024

This week three major mortgage lenders Nationwide, NatWest and Santander confirmed they raised rates yesterday on new fixed rate mortgages amid competitors increasing rates last week as well as global and local uncertainty on consumer price inflation rises suppressing both the Federal Reserve and the Bank of England’s chances of reducing interest rates sooner rather than later.

Upward pressure on oil and fuel, wheat, bread, and biscuit costs as well as other staples have led to inflation increases in the US with some forecasting interest rate rises to up to 8% pa.  UK inflation was marginally down in March but with a risk of increase in UK inflation too but with the next announcement from the Office for National Statistics (ONS) for April’s inflation not due until 22nd May, we are walking a ‘tightrope’.

To add to our woes, Nationwide has today reported a fall in average house prices in the UK of -0.4% for last month and -4.0% pa since the August 2022 high. 


This is yet another crunch time.  UK house prices are now falling due to higher interest rates that are likely to be sustained for a longer period as well as there being little room for the Bank of England to cut rates.  Across the pond, the next Federal Reserve announcement on interest rates is due later today, so we are all waiting ‘holding our breaths’.

We do not expect the Bank of England to cut interest rates until the Autumn at the earliest and given the Federal Reserve may have to push the USA into recession to curb inflation, we are not confident at present although mortgage applications are up in the UK, but we suggest this is due to remortgaging requirements rather than new purchases and movers.

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