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Derin Clark

Derin Clark

Online Reporter
Published: 01/07/2020

June saw house price growth turning negative for the first time since 2012 and house prices have fallen by 1.4% month-on-month, the latest Nationwide House Price Index figures reveal.
According to Nationwide, the stalling housing market is mainly due to the impact of the Coronavirus on the UK economy. “It is unsurprising that annual house price growth has stalled, given the magnitude of the shock to the economy as a result of the pandemic,” said Robert Gardner, chief economist at Nationwide. “Economic output fell by an unprecedented 25% over the course of March and April – almost four times more than during the entire financial crisis.

“Housing market activity also slowed sharply as a result of lockdown measures implemented to control the spread of the virus. While latest data from HMRC showed a slight pickup in residential property transactions from April’s low, in May they were still 50% lower than the same month in 2019.

“Mortgage activity saw an even more dramatic slowdown – there were only 9,300 approvals for house purchase in May, down from 73,700 in February and 86% lower than in May 2019. However, our ability to generate the house price index has not been impacted to date, as sample sizes have remained sufficiently large (and representative) to generate robust results.”

First-time buyer mortgage deals withdrawn

Although the falling house prices might mean more first-time buyers are able to get onto the property ladder, since March, mortgage lenders have been pulling 90% and 95% loan-to-value (LTV) deals from the market. This has resulted in an increase in mortgage rates at these LTVs and fierce competition among first-time buyers to secure the best rates available. First-time buyers looking to get onto the property ladder should consider going through a mortgage broker who should be able to help them get the best rate possible. Alternatively, first-time buyers could consider saving for a larger deposit and buying a property at an 85% LTV, where there are more competitive deals available.

Lower LTV deals remain competitive

Existing homeowners who are looking to remortgage at 60% or 80% LTV will have found that rates have fallen since January . Earlier this week, we reported that the average rate on 60% LTV deals was 0.09% lower in June compared to January, while 80% LTV average rates were down by 0.37%. This, along with many lenders allowing automated valuations for remortgages, means that this could be the perfect time for homeowners to consider locking into a new mortgage deal if their existing deal is about to come to an end.


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