Analysis from Quick Move Now via Bloomers has shown that home purchase failures rose to 26.4% in August from 24.4% a year ago. The rise in failures is being attributed to buyers placing offers on property then finding out they can’t get the mortgage to cover the price. They note that there is also some trepidation among buyers that the new rules will lead to a property market collapse.
Mortgage broker SPF has also seen that mortgages agreed in principle are then not being fulfilled by banks.
The new rules, which come into effect next month, could possibly hit the UK housing market pretty hard and there is scope for a sharp correction in prices. I don’t think we’ll be seeing a crash but we might see any moves overdone in a knee jerk fashion before things settle down to level where the prices match the mortgage levels available.
A drop in prices might be seen as something negative along with the current economic slowdown and could add pressure to the pound by pushing back rate expectations.
