Daily bite-sized proptech and property news in partnership with Estate Agent Networking.
Will the housing market be hit by inflation and mortgage hikes before Christmas?
Just as things seem to be getting back to normal, over 800,000 households are now facing higher utility bills, with gas prices rising six times in 12 months, and six energy firms failing in a very short space of time.
To compound this, we’re seeing wage inflation with over a million jobs unfilled, a new homes sector hit hard by a lack of skilled workers, and the breakdown in supply chains.
Despite the government’s assurances that everything is just a blip and things will normalise, we are likely to see the cost of living rise, which means that the Bank of England will be writing some difficult letters pretty soon.
There are also signs that the housing market, which was put on steroids by the Chancellor, might actually have a darker side at play. Despite the level of inventory, the volume of properties for sale is low, keeping prices high. Those buying properties with a mortgage were, in the main, looking at a fixed-rate mortgage option.
The significance of this is that buyers only look to fix their mortgage rate if there is a collective belief that the Bank of England base rate might rise from its 0.1% level, triggering the need to pay more cash each month if they just took out a variable rate.
In a recent The Mortgage Introducer article, Darren Cook, head of analyser products at Moneyfacts, said: “Our latest research shows that over eight in 10 (81.04%) consumers looking for a new mortgage during August, searched for the availability of a fixed-rate mortgage…
“That leaves less than 20% of consumers searching for a variable rate mortgages, which may indicate that a vast majority of potential new mortgage holders may be more risk-averse in the current economic climate.”
If the wheels do start to come off and the housing marking falters, as it is the economic barometer of the UK on many levels, could it be the start of a very long winter of discontent?
Grenfell disaster blame game
Back in June 2017, 72 people died and 74 people were injured when Grenfell Tower caught fire. Since then, the building has stood stark on the Kensington skyline, wrapped in white with a banner that reads “Forever in our hearts”.
The three main players who were directly involved in the manufacturing and installation of the cladding and insulation, which caused a stack effect leading to the fire spreading rapidly up the building’s exterior, are now all pointing the finger of blame at each other as yet another stage of the inquiry move towards a conclusion.
Arconic, the company that manufactured the fateful Reynobond PE cladding, said it was compliant and that it was what happened to the cladding after it was supplied that caused the problem. Others in the supply chain who fabricated it and installed it, together with a different insulation material which proved to be hazardous, all claim they are not at fault.
At this point, the disaster is an ongoing inquiry, but when all of the pieces are finally put together and the matter is concluded, it would seem that one or more parties may be at fault. Clearly, something went very badly wrong in the process of this exterior cladding being put on to this fire accident waiting to happen.
Since the disaster, it’s been revealed that hundreds of thousands of people living all over the UK are living in similarly dangerous buildings, and remedial work will need to be conducted. In the meantime, buildings are needing fire watches, a costly matter. It’s also devalued many properties, with homeowners unable to sell or let.
Maybe Michael Gove’s first order of business will be to figure out how this situation can be fast-tracked so people can all move on, not least those who lost their loved ones over four years ago.