But this crisis will not be felt uniformly: 36% of homes in the UK are held mortgage-free, according to the Office for National Statistics. It is even higher among the elderly, with 66% of people aged 50 to 65 owning their own property.
These homeowners will be sheltered from rising rates and the ongoing mortgage crisis which, for some, will mean doubling or tripling monthly repayments. That leaves 28pc – some 6.8million properties – held with a mortgage or loan.
And don’t forget the 19% of houses rented by individuals, who will have to pay higher rents if their owner cannot repay their mortgages. This will hit hard the people whose finances are already on the brink due to the energy crisis and the soaring cost of living.
If people are unable to pay their mortgage, they will be forced to sell. If average mortgage rates hit 6%, home loans would be 35% lower than when mortgage rates were 2%, according to Zoopla. A typical buyer will only be able to borrow £125,775 from £193,500, a drop of almost £68,000.
Both of these factors, of course, will affect property prices sooner or later – although we won’t see the effects of this in official data for months, as those finishing now would have gotten their mortgage offer a while ago. at six months, when rates were much lower. Until then, we’ll have to look for the warning signs: falling buyer demands, more and more sales collapsing, and asking prices falling as sellers slowly realize reality.
Capital Economics and Credit Suisse have now forecast price drops of 10% to 15% – although due to the recent boom this only takes us back to 2021 prices. This crisis is not just a price crash of real estate, it is a sudden and global collapse of the market.