Will rising rates stop the house price boom?
This is Money Podcast
This is Money
4.1 • 650 Ratings
🗓️ 14 May 2022
⏱️ 43 minutes
🧾️ Download transcript
Summary
Rising interest rates and the cost of living crunch are putting a serious squeeze on how much buyers can borrow - and that means they can't keep paying ever higher prices for homes.
Meanwhile, stories are emerging of banks and building societies getting cold feet on some of the offers that ambitious buyers have had accepted and the lenders are down-valuing properties.
What's a down valuation? When the bank or building says, 'we're sorry but that property isn't worth what you have agreed to pay'.
Combine that with the best mortgage rates having more than doubled and you might finally have the recipe for the property market running out of steam.
On this week's podcast, Georgie Frost and Simon Lambert discuss whether house prices can defy gravity once more.
Also on the show, should you sign up to a savings platform to manage your cash in one place and hopefully get a boost on rates?
Plus, what should investors do as a slow motion crash hits stock markets and sends the price of many shares and popular funds and trusts sinking.
And finally, fed up of being told to cancel your subscriptions to save money? We look at ways to keep your favourite shows and music but cut back on costs.
Transcript
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| 0:00.0 | Welcome to This Is Money Podcast. I'm Georgie. For us down and joining me today is editor Simon Lambert. |
| 0:08.1 | And coming up, will banks and rising mortgage rates slam the brakes on the runaway house price train? |
| 0:14.2 | Savings platforms should you sign up. Stock markets are taking a beating. What on earth can you do? |
| 0:19.3 | Plus Netflix and chill out. We'll let you know |
| 0:22.6 | how to save money on your subscriptions without missing out. Don't forget, new step to date with all the |
| 0:26.8 | latest breaking money news. Just go to this ismoney.co.uk or download the app. Market updates |
| 0:32.8 | and conversations around the financial world don't have to be boring. The Digest and Invest |
| 0:37.1 | Podcast by Eatororo is a great |
| 0:39.0 | way to tune into what's happening in a fun and easily digestible format. Discover the Digest and |
| 0:44.4 | invest podcast at E-Toro.com forward slash academy forward slash podcasts. But first, for almost two years, |
| 0:51.6 | house prices have been storming upwards. |
| 1:00.6 | High demand, coupled with a supply shortage, has sparked bidding wars, pushing offers far above asking prices. |
| 1:07.5 | But brokers say they're now seeing lenders apply the brakes and increasingly down value homes by tens of thousands of pounds. Now, throw in the fact that the average two-year fixed deal is now at its highest since |
| 1:11.7 | March 2015 and dare we ask if the heat has finally come out of the housing market. |
| 1:18.1 | At Simon, firstly, a bit of jargon busting. What does down value mean? |
| 1:22.8 | Down value. It's a polite way of saying that the bank thinks that you've agreed to pay far too much |
| 1:29.3 | for a house. When you get a mortgage, your mortgage lender, bank or building society, does a valuation |
| 1:35.6 | on that property. And that's when that mortgage lender decides whether they are willing to lend on it. |
| 1:41.4 | Now, it doesn't have to be precise because what you might pay for something might not |
| 1:46.7 | be what the next person might pay for it. They might pay more. They might pay less. You don't really |
| 1:50.8 | know. But the bank or building society wants to know that if push comes to the shove, you don't pay your |
| 1:55.8 | mortgage. They have to repossess the property. Then they have to sell it. They're going to get |
... |
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