The tipping point for the economy could come if fixed-rate mortgages rise above 7%
All things considered, Britain’s housing market has held up pretty well so far in the face of a relentless rise in borrowing costs that has seen five-year fixed rate mortgages climb above 6%. House prices, according to the Nationwide Building Society, are down just 3.5% on a year ago and rose slightly in June. The Bank of England reported a small rise in mortgage approvals in May.
The key words, though, are “so far”. Just because there has yet to be a housing crash despite 13 consecutive increases in interest rates from Threadneedle Street’s monetary policy committee doesn’t mean there won’t be one. There is still the chance of a soft landing but the risks of a hard landing are rising by the day.
