Biggest problem for homeowners continues to be mortgage costs

According to the largest mortgage provider in the UK, mortgage costs continue to be the largest obstacle for prospective homeowners and those nearing the end of fixed-term agreements.

Amanda Bryden, Halifax's head of mortgages, noted that while salaries improve and home price growth stays muted, the stress brought on by rising interest rates is anticipated to lessen progressively.

As per the most recent data provided by the lender (external), the average property price in the United Kingdom decreased by 0.2% in June but remained pretty stable.

According to Halifax, the average price of a home in the UK was £288,455 last month, slightly less than £288,931 in May.

Prices increased 1.6% over the previous year, in line with recent data from the Nationwide Building Society.

In an effort to combat skyrocketing inflation, the UK's central bank started raising its benchmark interest rate in late 2021. Prices increased as supply chain constraints resulted from the relaxation of pandemic-related limitations, and when Russia invaded Ukraine, the cost of food and energy surged.

At 5.25%, the Bank's base rate is at its highest point in sixteen years.

Nonetheless, the Bank seemed to imply that it could lower rates at its upcoming meeting on August 1st during its most recent rate-setting session.

In spite of this, a lot of homeowners who were previously under fixed-rate agreements now have mortgage rates far higher than they are accustomed to.

The Bank said last week that in the next two years, the mortgage payments of around three million families will increase.

The average rate for a two-year fixed agreement is currently 5.93%, which is lower than the highest rate of 6.86% from the previous year. However, prices have been lowered recently by major lenders.

According to Halifax's most recent data, property prices in Northern Ireland increased at the quickest rate among the regions, rising 4% over the previous year.

London continues to have the highest average house price of £536,306.

(Sources: bbc.co.uk)