Almost half of British house sellers were forced to cut their prices by more than 5% last month as surging mortgage costs put further strain on buyers, according to research by Zoopla Ltd.
(Bloomberg) — Almost half of British house sellers were forced to cut their prices by more than 5% last month as surging mortgage costs put further strain on buyers, according to research by Zoopla Ltd.
About 15% of sellers accepted at least 10% off the initial asking price, with discounting at its most widespread since 2018, the property portal said.
While house prices still grew 1.2% year-on-year in May, momentum is slowing sharply and values are expected to decline as much as 5% over the course of the year, according to Zoopla.
Buyers are negotiating lower as they struggle to prove they could afford a mortgage.
The Bank of England last week made its 13th straight interest rate increase in a bid to reduce stubborn inflation, a move that’s heaping pressure on borrowers and potentially pushing the UK into recession this year.
The average 2-year fixed residential mortgage rate was 6.26% on Tuesday, up from 5.26% on May 1, while the average 5-year fixed rate was 5.87%, up from 4.97%, according to Moneyfacts Group Plc.
Banks have pulled hundreds of products in the past few months, replacing many offers with more expensive ones.
Last week Chancellor Jeremy Hunt met with the UK’s largest lenders to implement further measures to protect existing borrowers who run into difficulties, while ruling out direct support on mortgage prices.
–With assistance from William Shaw and Tom Rees.
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