Housing Market Movement Oct/Nov 2022 by numbers ~Halifax

Posted: 14-12-2022

Reading Time: 6 minutes

house with fluctuating arrowsToday's post is all about the contractors' longstanding best buddy when it comes to mortgages: The Halifax Bank.

First, we look at the lender's report on November house prices.

Then, we look at their most recent assault on the recent rise in interest rates.

The latter by no means return to the historic lows of last year. Or even the optimistic lows of earlier this year, if truth be told. But they do represent a sea change.

Combined with reducing house prices, the drop in interest rates is significant. They might be the first signal that the housing market is changing to a buyer's market for the first time in months, if not years.

House prices dropping: November 2022

Scanning the Halifax house price index, you can't fail to see red flags. This is the summary of the main points by numbers:

Average monthly UK house prices continued their downward trend in November, falling by 2.3%. That's a notable drop compared to October's -0.4% shift.

Comparing year-on-year house price growth, the report's findings are starker yet. November 2021-November 2022, house price growth registered +4.7%. October's year-on-year figure reflected house prices rising by 8.2%.

That -3.5% flux in annual growth is the most dynamic since October 2008 when the world was suffering the backlash of global financial collapse.

The national picture

England's North East was the only region to show annual growth last month, and then only by 0.1% (from 10.4% in October to 10.5% last month).

London's annual growth dropped from +6.6% to +5.2%, whilst Scotland cooled to +6.5% (from 7.4%) and Northern Ireland to +9.1% (from +9.7%).

But two areas, in particular, imply that the post-pandemic 'race for space' is petering out.

A change of scenery

House prices in Wales and the South-West burgeoned as lockdowns saw many homeowners' priorities change.

In the latest Halifax report, those two areas' house prices have registered some of the greatest reductions of all.

In October, Wales' growth stood at 11.5%; that dropped to +7.9% in November. The South West suffered a similar fate as its year-on-year house price growth dropped to +8.4% in November from +10.7% in October.

Usually, these trends would make for an ideal buyer's market. The problem is, so many homeowners are sat on sub-2% fixed interest rates. Many of those deals have up to four years left to run.

So, the question is: do homeowners have the stomach for a move onto the higher rates currently on offer?

The slow return to sub-5% mortgage interest rates

Last month, the Co-op became one of the first mortgage lenders to return to sub-5% interest rates.

Since then, many other lenders have followed suit. And, according to Sarah Coles of Hargreaves Lansdown,

Fixed-rate deals are likely to continue on their current downward trajectory.

Good news, for sure. But if you are coming to the end of a low fixed interest rate deal, it's bitter-sweet news at best.

Hark now hear Halifax's olive branch

Many contractor-friendly lenders have moved with this trend over the last month, too. Halifax is one and it's struck hard, seemingly taking a machete to some of its interest rates. It must know something about the Bank of England's new base rate announcement next week that we don't.

Seriously, dropping a whole percentage point is rare. But that's what Halifax has done, with reductions in its mortgages by up to 1.01%.

Starting with that biggee, you can get a 5-year fixed rate mortgage for 4.5% so long as you have a 40% deposit.

They have reduced rates on lower-deposit mortgages, too:

  • 5-year fixed rate mortgage, 80% LTV at 4.7% (down from 5.28%);
  • 5-year fixed rate mortgage, 90-95% LTV at 5.09% (down from 6.09%)
    • (this mortgage comes with no fee);
  • 5-year fixed rate remortgage, 90% LTV at 4.85% (down from 5.48%).

We wrote very little business in October - yay!

You know what? I'm feeling pretty pleased with myself.

"Why?", you ask. We did very little business in October.

"Wait, what?", you ask. Contradictory, right? No.

We advised our clients who were about to drop onto their lender's SVR to sit tight when rates were tickling 6%. We asked them to bite the bullet for a few months, suggesting that rates would soon begin to drop.

Now, they're beginning to do just that.

OK. They're not in the 2%s. But the truth is, they're not likely to be any time soon, if ever again in my lifetime.

We got too cosy with the historic lows we saw just last year (was it really only 15 months ago?). Those rates were not sustainable, as has been proven the case.

It doesn't make it any easier now. But higher mortgage rates are another thing we're just going to have to learn to live with. And if you feel trussed up like a kipper, I empathise: that's the quasi-reality of the UK housing market post-pandemic (sorry).

Author: John Yerou

John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.

Posted by John Yerou

on December 14th, 2022 18:21pm in Blogs, Mortgage Blog.