Britain is well-placed to cope with a downturn in the housing market

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Trouble in the British property market is unlikely to provoke the same kind of vicious cycle of bank failures as it did in 2008

Save time by listening to our audio articles as you multitaskNot for much longer. Having taken out a one-year fixed-rate mortgage as “the economy was so confusing at the time”, they now face a steep rise in their housing costs. Even the best deals on offer would see the couple’s monthly housing bill increase by £300 , over 25% more than they pay now. “It’s a bit grim,” she says.

As in many other countries, housing transactions surged in Britain during the covid-19 pandemic. Low interest rates, a temporary pause in stamp duty on some property sales and the spread of working from home combined to fuel a dash for space. First-time buyers were enthusiastic participants in the market, accounting for more than half of all new mortgages during the pandemic.

But such a fall would take the price of an average house back only to the level it was at in the second half of 2021. For most of last year, house prices continued to rise. That all came to an end in October. “Mortgage rates spiked during the Truss turmoil,” says Neal Hudson of Residential Analysts, a consultancy, referring to the effects of the disastrous mini-budget unveiled by the government of Liz Truss.

“We can afford it,” says Mrs McWaters, of the rise in her mortgage bill. She and her husband, who also works in, will reduce the amount they usually put into savings, towards their pensions, in order to tide themselves over. Others, however, will struggle. Debt-advice charities report that they are seeing a gradual increase in the number of homeowners asking for help; they usually make up only a small percentage of their caseloads.

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Yeah, sure.

Ya… when the Economist says it, it’s probably better to take the opposite view lol.

Hm...

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