At the same time Rishi Sunak was sworn in as Britain’s 56th prime minister on Tuesday, mortgage rates continue to hover near a 14-year high – the highest levels since the 2008 financial crisis. Although the average two-year fixed-rate home loan dipped slightly from 6.65% to 6.54%, while the average five-year fixed-rate deal also dropped to 6.41% – according to Moneyfacts Group Plc – soaring mortgage rates will likely be at the forefront of Sunak’s agenda as he looks to stabilise the UK’s turbulent economy. The study additionally revealed that on Monday, mortgage offers at 95% loan-to value halved compared to the start of the year, falling from 347 to 137. Now, as Sunak takes the reigns from his predecessor, Liz Truss, he is set for an arduous start to his tenure. In light of this, David Hannah, Group Chairman at stamp duty specialists Cornerstone Tax, explains the challenges that Sunak will be faced with, particularly with issues around a severe stock shortage impacting home ownership across the country, alongside the current chaos surrounding the rental market.
Inflation currently stands at a staggering 10.1% and is placing increasing stress around the future of home ownership across the nation. Experts such as Hannah are now warning that increasing stock levels, alongside building affordable social housing is the only way to alleviate the current pressures faced by aspiring homeowners and first-time buyers. In turn, this could also relieve the demand in the rental market and give many the chance to make their way onto the property ladder.
New research from the Office for National Statistics (ONS) unveiled yesterday that almost a quarter of Brits with a mortgage reported difficulty keeping up with their payments, while almost 40% of renters are finding it hard to afford their rent. Properties in the UK are now more unaffordable than ever, with figures released by the ONS showing that the average home sold in England cost the equivalent of 8.7 times the average annual disposable income – which is the worst affordability ratio in England since records began in 1999. Further data released from Rightmove shows that the average UK house price now stands at £367,760 – rising 0.7% month-on-month in September. House sellers have continued to raise their asking prices despite Brits facing higher interest rates and a cost-of-living crisis. For many Brits, getting onto the property ladder is now an unachievable dream, with an unprecedented level of demand causing a severe undersupply of housing which the industry has been suffering from for the past few years.
