Housing: Higher borrowing costs are pushing down prices

Housing markets around the world are feeling the effects of rising mortgage rates and lower affordability due to high inflation. Mortgage costs in the UK have recovered slightly after then-chancellor Kwasi Kwarteng’s mini-budget, however, the number of new mortgage applications tumbled to just over 35,000 in December, from 46,000 in November. New loans in the US are still declining and demand for mortgages in Europe has fallen at the fastest pace on record as mortgage rates have increased.

US house prices have fallen for the fifth month in a row and prices in the UK are falling at the fastest rate since the financial crisis in 2008. Prices are also falling in Germany, Denmark, Italy and Sweden and forecasts estimate they will fall by 5% this year. In New Zealand, Australia and Canada rising rates have put housing markets into reverse, with prices expected to fall by up to 20%. Meanwhile, efforts to restore confidence in the Chinese market have so far failed as new home sales in January were 32% below the 2022 level.

For the following stories, please click on this link*

  • Global – Markets rally as they see the end of interest rate rises coming into view
  • Central Banks – Rate hikes slow as banks weigh the evidence
  • Equities – Energy stocks continue to benefit from high prices

(*Please note, The contents of this e-shot been prepared for general information only. It does not contain all of the information which an investor may require in order to make an investment decision. If you are unsure whether this is a suitable investment you should speak to your financial adviser. This information is not guaranteed to be correct, complete, or accurate. FE Research is a division of Financial Express Investments Ltd, registration number 03110696, which is authorised and regulated by the Financial Conduct Authority (FRN 209967). For our full disclaimer please visit www.financialexpress.net/uk/disclaimer. Data Sourced from FE Analytics, and Bloomberg Finance LP.)

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