The housing market can weather a storm of rising interest rates and falling costs of living, according to a city report.
Homeowners are less exposed to the risk of BOE rate hikes than during previous downturns, even with a possible 0.75 percentage point hike later this month.
As a result of this increase, the base rate set by the bank will be 2.5%.
Reliability: Mortgage lenders and borrowers have become “more cautious” than they were during the 1992 and 2008 recessions.
Mortgage lenders and borrowers have become “more prudent” than they were during the 1992 and 2008 recessions, Lieberum said, and many home loans were taken out at fixed rates.
Analysts at the London-based broker also highlighted the strength of the labor market, the unemployment rate near a 50-year low of 3.8% and high job vacancies.
This means that people can “find a job quickly if the need arises” and firms will be less likely to lay people off due to concerns about hiring new staff.
Interest rates shot up to 15% in the early 1990s, forcing thousands of borrowers to quickly sell their homes. Prices also fell in 2008.
The fall in UK homebuilders last month was the sector’s “third-worst month” in 14 years amid fears that rates and inflation could make property less affordable, Liberum reported.
But it says the sell-off in British home builders was “overly pessimistic” and the property market is not heading for a crash.
Despite “a gloomy outlook driven by rising tariffs and energy prices,” the housing market remains strong, it added.
Credit: www.dailymail.co.uk /