Beautiful Virgin Islands

Thursday, Jun 30, 2022

Cost of living: House prices at risk as inflation takes its toll, Nationwide boss warns

Cost of living: House prices at risk as inflation takes its toll, Nationwide boss warns

The country's second-largest mortgage lender sees a chance of shockwaves for house prices ahead as the effects of rising interest rates and inflation inflict further damage on affordability.

House prices are at risk of falling as a series of headwinds damage spending power, the outgoing boss of Nationwide Building Society has warned.

Joe Garner said higher property prices and interest rates, together with steep increases in the cost of living, meant that housing affordability had become even more challenging.

He made his remarks as the UK's biggest mutual reported a near-doubling of annual profits on the back of buoyant mortgage demand.

Pre-tax profits jumped to £1.6bn in the year to 4 April - up from £823m in the same period a year earlier.

But Mr Garner, who steps down as chief executive next month, said of the outlook: "The emergence of higher inflation, which has been exacerbated by the war in Ukraine, is likely to exert a significant drag on the economy in the near term.

"Higher inflation will place significant pressure on household budgets, especially for those on lower incomes who also accumulated fewer savings during COVID-related lockdowns.

He predicted that housing market activity would slow from elevated levels that has seen average prices increasing at a double-digit annual rate as demand from those wanting to move home exceeds the number of available properties.

Mr Garner leaves the helm of the country's second-largest mortgage lender on 1 June - to be succeeded by former TSB boss Debbie Crosbie.

Nationwide said its financial performance was boosted by a strong economic recovery from pandemic lockdowns.

It reported a £6.9bn jump in gross mortgage lending as it benefitted from the buoyant housing market which was supported by national government aid, including the now-ended stamp duty holiday for England and Northern Ireland.

Comments

Oh ya 39 days ago
Not to worry reports are coming out that the subprime borrowers are defaulting on car and house loans, you knows the ones whobought because interest rates were too low to separate the wheat from the shaft. They need to raise rates like they did in the 80s to 19 percent to stop this inflation that is killing people on fixed income and seniors who live on interest of there years of saving

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