Bolton's Cardwells said wider scale economic changes have consequences

Recent figures from the Office for National Statistics showed that UK inflation rose to 10.1 per cent, from 9.4 per cent two months earlier.

While data from the Bank of England expects it to further increase, peaking at 13.3 per cent in October.

The accompanying higher interest rates, currently at 1.75 per cent, and bleak two-year economic outlook generally means bad news for homebuyers, landlords and renters across the UK.

Market analysts at CMC Markets expect interest rates to further rise to 2.25 per cent in September.

This directly impacts mortgages on variable rates – around one in five households in the UK – and another 3.1m whose fixed-rate periods expire in 2022-2023, according to UK Finance estimates.

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Borrowers whose repayments are directly linked to the base rate, as set by the Bank of England, will now face mortgage repayments at rates between three per cent and four per cent, up from 1.75 per cent and 2.75 per cent, only five months earlier.

CMC Markets analysed the latest data for June from HM Land Registry, published on August 17, and concluded that the likely tendency for house prices is in a temporary slowdown, which is good news for those waiting a little longer to buy a home.

Speaking ahead of Chancellor Kwasi Kwarteng's "mini-budget" on Friday, Andrew Cardwell, managing director of Cardwells Estate Agents, said wider scale economic changes have consequences for everyone in Bolton.

He said: "There are likely going to be trying times for many people in our community, the cost of living crisis is arriving and no-one is going to be sheltered from its effects.

"That will include tenants, landlords, property sellers, purchasers and those not looking to move alike.

"These wider scale economic changes have consequences for everyone in a variety of ways and I suspect that the incoming Prime Minister and Chancellor will take steps to address these pressures and offer further support as we progress through this period. 

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"Recently we have seen interest rate rises, these will have an impact on the affordability of mortgages for new purchases, those moving to a variable interest rate after after a fixed term, or those looking to remortgage.

"As we move towards the winter and the New Year there may be additional interest rate rises, while the incoming increases to the utility costs are going to further the squeeze on household budgets.  

"Therefore pressure on property prices may well continue from the “demand” side, as these market headwinds continue to have an impact.  

"As time progresses an annual property price rise of single figure percentages, rather than the more recent double digit growth is much more likely.  

"Our local housing market is resilient and often robust to the wider struggles of the economy as the fundamentals are so strong."

Michael Hewson, Chief Market Analyst at CMC Markets, said: “Houses sold in June 2022 only increased in price by one per cent compared to May, whereas, last year, this constituted a much more generous 5.7 per cent surge.

"This is only the first month this year for prices to slow down at such a fast rate, so some caution before jumping to conclusions is advised.

"Remember, house prices may be slowing down, but they are not decreasing.

"Importantly, since this is transactions data processed at the time, it does not take into account the big leap in interest rates that the Bank of England announced later that month, let alone the even bigger hike in August.

“Therefore, despite the soaring inflation and rising consumer prices across the board, UK house prices appear to be trailing behind because demand for homes has generally come to a screeching halt.

Inflation rose to 10.1%, from 9.4% two months earlier (Image: PA)

"Most buyers are weathering the storm for a few more months at least, while some are also working out how the cost of living crisis will pan out in the medium term so that the new mortgage is not squeezing their pockets beyond their comfort zone.

“For those still keen to get on the property ladder, there are plenty of fixed-rate banking products that can insulate them from the current spiralling interest rates on mortgages.

"They should, however, prepare for the possibility of being faced with higher-than-expected repayments once the fixed rate period expires, as the new variable rates are at the lender’s discretion.

"Fixed rates are not a cure-all either, as they may now be set to a higher level to start with.

"The buy-to-let market is equally volatile.

"Landlords will either pass the increased mortgage repayments onto tenants by increasing their rent or simply sell fast to lock in a better price.

"Right now though, those already on the property ladder are generally better off staying put rather than moving or re-mortgaging.

"They would not get a good deal on their old house in this market and may likely end up losing more money overall."