The high street lender says while typical homeowners coming off fixed rate deals face significant increases in their monthly payments, borrowers have been “stress tested” for higher rates and so should be able to cope, meaning there is unlikely to be “waves of forced selling”.
Rising mortgage rates have yet to hit the housing market but threaten to be a “significant drag” in the short-term, Nationwide has said.
However, the high street lender said “a relatively soft landing is still possible” against a backdrop of income growth and modest falls in property prices.
The building society also said while typical homeowners coming off fixed rate mortgage deals face significant increases in their monthly payments, it points out those borrowers had been “stress tested” for higher rates and so should be able to cope.
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As such the market was unlikely to see “waves of forced selling”, providing the labour market and interest rates followed expectations.
The assessment came after fixed-rate mortgage deals recently broke through the 6% mark following on from the Bank of England increasing the the base rate from 4.5% to 5% in a bid to cool inflation, which remains stubbornly high at 8.7%.
Nationwide’s data indicated house prices fell by 3.5% in the year to June, following a 3.4% drop the previous month.
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Source: news.sky.com
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