House prices set to fall ‘10% next year’, mortgage broker forecasts

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Lending giants are hiking their mortgage rates and withdrawing products following the market turmoil prompted by Friday’s mini-budget. HSBC UK said it has removed its “new business” residential and buy-to-let products from sale, but all its products and rates for existing customers remain available. Mr Bolger explained the “big impact” it will have on the ability to buy.

Speaking to BBC Radio 4’s Today programme, he said: “Because people have got used to really low mortgage rates in the last 10 years, I think the consequences are going to be very significant.

“I think we can expect to see a significant fall in house prices. I’m suggesting around 10 percent next year.

“The key thing here, you could have got a five-year fixed rate mortgage at one percent if you had a big deposit.

“A lot of people who are thinking of buying are going to rethink those plans, they may not buy at all. If they buy, it may be at the lower level.

“At the moment, I think we’re not going to see many sellers because most people have got a fixed rate and therefore it’s going to take time before these costs filter through.

“It’s certainly going to have a big impact on the ability for people to buy.”

It comes as Britain’s biggest building society, Nationwide, said that from Wednesday, it will increase its two, three, five and 10-year fixed-rates by between 0.90 and 1.20 percentage points.

Existing members looking to switch to a new deal or borrow more will see lower increases of between 0.55 and 0.85 percentage points, while tracker rates will increase by 0.50 percentage points, in line with the recent increase in the Bank of England base rate.

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Nationwide said in a statement that in recent days, swap rates, which mortgage pricing is based on, have increased at unprecedented levels in response to the current economic conditions as the market factors in further predicted rises in the bank of England base rate.

The Society said it is making the increases to ensure its mortgage pricing remains sustainable and the increases are lower than the rise it has seen in swap rates.

The rates for new customers moving home and first-time buyers include two-year fixed rates starting from 5.59 percent with a £999 fee.

Henry Jordan, Nationwide’s director of mortgages, said: “The changes made to our new business range are reflective of the current interest rate environment, which has seen mortgage rates increase across the market in line with a rapidly changing economic environment.

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“Swap rates, on which mortgage pricing is based, have spiked as the market factors in expected future bank rate rises. These latest changes will ensure we are able to continue lending in a way that is sustainable to borrowers of all types.”

Santander UK said it will be removing its 60 percent and 85 percent LTV (loan-to-value) products for new customers and increasing other rates for new and existing customers from 10pm on Tuesday.

It said: “Customers who have already applied by this time will not be impacted. We continually review the products we offer in light of market conditions.”

A NatWest spokesperson said on Tuesday: “We keep our rates under continual review in line with market conditions.”

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