Lloyds Bank has warned that residential property prices look set to fall back to 2021 levels, amid weaking housing market conditions.
The high street lender is predicting a 7% drop in house prices this year as higher interest rates adversely affect homebuyer demand and cause a contraction in the wider UK economy over 2023.
The latest prediction from Lloyds Bank comes on top of similar house price forecasts from Nationwide (-5%) and Santander (-10%).
Lloyds dismissed talk of a house price crash, owed in part to the general housing shortage and a recovery in the mortgage market.
Lloyds boss Charlie Nunn said: “20% of customers are having to take difficult decisions, cancelling subscriptions, moving towards value brands. We are focussing in on those customers who are going to have an income shock.”
He also highlighted that there is a looming “mortgage shock” for 200,000 Lloyds customers due to exit a fixed rate deal this year.
However, Nunn is optimistic that fixed rate mortgage deals are getting cheaper, and while he believes that this year will be tough for many, it will be “nothing like the financial crisis, more like recessions we had nearer the start of the century”.
How far will house prices fall this year?
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