According to a report by The Telegraph: “The energy crisis has been replaced by a mortgage crisis, with the average two year fixed rate approaching 6pc, up from 4.74pc before the mini budget”.
The report continues: “The
fallout for mortgage borrowers, buyers and sellers has been instant. Property
sales are already collapsing and lenders are reneging on mortgage offers and
agreements in principle. One estate agent in north Wales said 20
sales had fallen through in the first half of last week as a direct result of soaring rates.
“Before this sudden crisis, the market was slowing. But last week's events have sped up this decline, and it now seems that the end of the house price boom is nigh. Soaring interest rate expectations mean at least 134,000 buyers have been immediately shut out of the property market and lenders and banks are cutting valuations by tens of thousands of pounds”.
In Portugal the average price of houses continues to rise, with a record increase of 13.2 percent in the second quarter. With the country known for having a limited supply of housing and increasing demand the prospects for the Portuguese housing market look shaky but currently do not reflect the situation in the UK.
Mortgage interest rates
However, interest on new housing loans exceeded 2 percent for the first time since May 2016.
The average interest rate on new housing loans rose to 2.01% in August, exceeding 2% for the first time since May 2016, according to data released by the Bank of Portugal (BdP).
“In August, banks granted 1,855 million euros of new loans to individuals, 111 million euros less than in July”, indicates the BdP. There were 1,205 million euros of mortgage loans, 478 million euros of consumer loans and 171 million euros of credit for other purposes, values that compare with, respectively, 1,348, 454 and 163 million euros in July.
The institution led by Mário Centeno indicates that the average interest rate on new housing loans rose to 2.01% (1.88% in July), while on new consumer loans, the average interest rate increased to 7.93 % (7.88% in July).
The average interest rate on the stock of housing loans continues to approach the euro area average, settling at 1.32%. “In Portugal, the vast majority of home loans have an interest rate indexed to the 6-month or 12-month Euribor rates, which implies that the interest rates on loan contracts are reviewed every 6 or 12 months, respectively”, therefore “Euribor changes are transmitted more quickly to the stock of housing loans in Portugal than to the euro area average”, explains the BdP.