updraftplus domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131hustle domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131wpforms-lite domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131The recent decision by the Bank of England (BoE) to increase interest rates has further compounded the issue of declining home sales in the UK.
The UK housing market, which has been known for its resilience and fluctuating dynamics, is experiencing a significant downturn in demand for homes.
In a recent revelation, Zoopla, a prominent real estate company, reported that demand for homes in the past four weeks has plummeted by a staggering 34% when compared to the average demand observed over the last five years. This marked decline has left experts and market participants concerned as they grapple with the reasons behind this sudden and substantial drop.
One of the pivotal contributors to the decline in demand can be attributed to the recent increase in mortgage rates. The report highlighted that mortgage rates are now 5% and higher while renting in the UK is 10% cheaper than buying on average.
This shift is not only reshaping the housing preferences of potential buyers but also casting a significant influence on the overall market dynamics, particularly for first-time buyers.
The increasing cost of living in the UK is another major factor that is squeezing the housing market. The cost of living includes a variety of expenses, including everyday necessities like food, transportation, and utilities. As these prices rise, individuals and families have less disposable income, making it more difficult to allocate cash for big purchases such as home ownership.
Amidst this steep decline in demand for UK homes, Zoopla is projecting a staggering 21% decrease in completed sales for 2023 compared to the previous year. With only one million transactions anticipated to conclude this year, the statistics indicate a profound shift in the way Britons approach homeownership.
The average household is now forecast to shift houses just once every 23 years, a considerable six-year rise from 2021 figures.
The recent decision by the Bank of England (BoE) to increase interest rates has further compounded the issue of declining home sales in the UK. With the interest rate reaching a 15-year high of 5.25%, mortgage lending rates have also surged. Although there has been a slight decrease in mortgage rates, they remain at elevated levels.
For instance, the average rate for a 2-year fixed mortgage for a 95% loan stood at 6.7% during the week of August 21, according to online real estate company Rightmove. While this represented a slight decrease of 0.2% from the previous week, it highlights the challenges that potential homebuyers continue to face.
Looking ahead, there is a cautious optimism that the housing market could regain some momentum, provided certain conditions are met. Richard Donnell, the executive director at Zoopla believes that mortgage rates must fall to 5% before there is revived interest in home buying in the second half of 2023.
This demonstrates the market’s sensitivity to borrowing costs and the delicate balance that must be maintained for a sustained recovery.
Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
US residents are going through the worse level of housing affordability not seen for four decades as mortgage rates continue to spike.
Housing affordability in the US has hit its lowest level in about 40 years, caused by a recent hike in mortgage rates. The rising rates have now made it difficult for prospective house owners to purchase homes, and difficult for them to suspend their purchases hoping for possible respite in the near future.
Data from residential real estate brokerage shows that the number of homes sold in June crashed by 15.6% year on year (YoY) to 520,504 following an increase in the 30-year fixed rate mortgage jumping from 1.2% to 6.7% in the same period. According to Redfin:
“Prices are rising despite relatively low demand because there are so few homes for sale. New listings are down 27% year-over-year, the biggest drop since the start of the pandemic, and the total number of homes on the market is down 14%, the biggest drop since March 2022.”
According to home loan mortgage corporation Freddie Mac, the 30-year fixed loan is up from 6.7% to 7.09%. For the Mortgage Bankers Association, the rate is 7.16%
Many reports suggest that US housing affordability is worsening because of the increase in mortgage rates and a heavy shortage in inventory. In addition, previously owned homes are difficult to sell because costs are generally high. Furthermore, the general worry about the economy is causing prospective buyers to rethink their purchases.
The problem is unsurprisingly worse for people with low credit scores, as some get quotes around 8%. According to William Raveis Mortgage regional vice president Melissa Cohn, most buyers still deciding to purchase homes at current conditions hope to refinance much later when rates fall. Cohn also believes current buyers think now is the best time because prices would increase when rates drop and other buyers flock in.
The increase in mortgage rates ties in with the rate hike campaign from the Federal Reserve as it battles inflation. Since March last year, the Fed has increased rates 11 times, bringing the rate to the 5.25% to 5.50% range after the last 25-basis-point increase in July. The midpoint is the highest since 2001.
Last month, a Yale professor of economics Robert Shiller noted that the price of houses has been on a rally for the last 10 years. However, Shiller states that this rally would end if the Fed ends its current tightening cycle.
Unfortunately, the minutes of the last Fed meeting reveal that more rate hikes are possible this year because inflation is still some distance from the 2% target. Fed Chair Jerome Powell also had this position at a news conference after the last meeting. Powell said the Fed will likely raise rates again at the September meeting. However, he promised that the decision would depend on the current economic situation following careful assessments.
Interestingly, the likelihood of further hikes goes against a prediction from economists Reuters polled in July before the last increase. Although they correctly predicted the increase by 25 basis points, they believe the increase would be the last hike for a while.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Matthew Ryan, head of market strategy at global financial services firm Ebury, anticipates that the central bank will hike interest rates to around 6.35% within the first three months of next year.
Mortgage rates in the United Kingdom have reached a 15-year high, adding pressure on homeowners and slowing the housing market. According to data from Moneyfacts, the average two-year fixed rate for residential mortgages has now peaked at 6.66%, a little increase from the 6.63% it recorded on Monday, July 10. Last year on October 20, the mortgage rates were at 6.65%. However, the new rates represent the highest level homeowners in the UK have seen since August 2008, during the global financial crisis, bringing mortgage costs to their highest levels for nearly two decades.
The country’s housing market has been on a roller coaster ride recently. After a turbulent start to the year, the market began to recover in early 2023. However, the recovery has been short-lived, as homeowners and buyers have recently faced renewed mortgage pain.
The rise in mortgage rates in the UK is driven by several factors, including rising inflation and expectations that the Bank of England (BoE) will continue to raise interest rates to bring inflation under control. The BoE has expanded its base rate many times since December, and the central bank is still expected to increase the rates further to keep inflation under control.
Last month, the BoE hiked its base rate to 5%. The new rate marked its highest level in 13 years. Economists believe the base rate could rise to as high as 6% by the end of the year. The rate increment has caused mortgage rates to surge, making it more expensive for people to borrow money to buy a home. As a result, house prices have begun to fall, and the number of mortgage approvals has declined.
According to reports, experts are warning that the rising cost of mortgages could significantly impact mortgage holders. Danni Hewson, head of financial analysis at AJ Bell, an investment and stock broker company, said on Tuesday:
“Mortgage payers are marching towards fixed rate renewal dates with a sense of dread.”
She believes that the mood in the market is changing and that bad news is becoming more commonplace.
Another expert, Matthew Ryan, head of market strategy at global financial services firm Ebury, anticipates that the central bank will hike interest rates to around 6.35% within the first three months of next year.
“Financial markets are pricing in a peak in UK interest rates of around 6.35% in the first three months of 2024, up from 5% currently,” he said.
Ryan also warned that this could have a massive impact on mortgage holders, as they will see their monthly payments increase.
The rising cost of mortgages is likely to impact homeowners significantly. Those on variable-rate mortgages will see their payments increase as interest rates rise. While those on fixed-rate mortgages will not see their fees increase immediately. However, they will be locked into a higher rate when their fixed-rate period ends.
Homeowners struggling to make mortgage payments should contact their lenders for possible solutions. There may be options to help them, such as a payment holiday or a remortgage.
Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.
Subscribe to our telegram channel.
Join
Is the housing market in a bubble? Is the cryptocurrency party about to blow up? This informal study is fascinating because it doesn’t come from the crypto world. The author, Rick Palacios Jr., is the Director of Research at John Burns Real Estate Consulting. The results are surprising, to say the least. Especially considering how early we are. Whatever camp you’re in, one thing’s for sure, cryptocurrencies will be a big factor for the rest of the decade. Maybe for the whole century, even.
Related Reading | Virtual Real Estate Takes Off With Backing From Billionaire Mike Novogratz
Palacios Jr. begins by painting the current situation’s general picture:
“Low interest rates and a world awash in liquidity set the stage for financial markets and asset-value froth as an adult today. As market participants, we watch with a healthy dose of nervousness, wondering just how long we’ve got until the inevitable bubble-bursting cleanup ensues.”
Even though the housing market is on the rise, “this period of ephemeral effervescence isn’t sustainable.” He doesn’t get into the rampant money printing that his country is living with, but we will. Inflation is one of the effects of all of these inorganic dollars entering the market. Another effect is that people feel, maybe subconsciously, that their money is losing purchasing power and turn to hard assets. Before Bitcoin, real state was the hardest asset there was. It’s only logical for the newly printed money to make its way to the housing market, raising prices.
“Trying to gauge crypto & NFT boom impact on housing market.” To test his hypothesis, the researcher turned to Twitter. His question was, “Have you or someone you know used profits from crypto and/or NFTs to help with the down payment of a home purchase?” In 72 hours, Palacios Jr. received 385 votes.
Trying to gauge crypto & NFT boom impact on housing market. Have you or someone you know used profits from crypto &/or NFTs to help with down payment on home purchase?
— Rick Palacios Jr. (@RickPalaciosJr) September 4, 2021
“To my amazement, 20% of respondents indicated yes, they had indeed used profits from crypto and/or NFTs to help with the down payment on a home purchase. Heading into the survey, my ballpark estimate would have been below 5%, probably closer to 1% or 2% if you’d asked me to place a bet. Yes, the Twittersphere likely understands and uses crypto/NFTs more than the general adult population, but still, 20%!”
If NewsBTC ran this poll through our Twitter account, numbers this high would be somewhat surprising. However, Palacios Jr.’s audience is not a crypto audience. His tweets are usually about the housing market. So, these numbers are outstanding. What’s happening here?
BTC price chart for 11/25/2021 on Coinbase | Source: BTC/USD on TradingView.com
After the survey, Palacios Jr. turned to his contacts in the real state business. He found out that “the percentage of home buyers voluntarily documenting crypto accounts during mortgage underwriting has gone from almost 0% one year ago to between 5% and 10% today.” In the case of down payments, though, “most lenders and builders I spoke with estimating the percentage at roughly 5% or less. On occasion, 10% to 15% was noted, namely in higher price points and/or communities skewing toward younger buyers more familiar with crypto.”
Over the last few months I’ve spoken with dozens of real estate & mortgage industry executives, trying to gauge what impact (if any) #crypto is having on the #housing market. Here’s what I’ve concluded. (1/) https://t.co/cNdaPrMSdY
— Rick Palacios Jr. (@RickPalaciosJr) November 16, 2021
So, the phenomenon is real. Also, take into account that “most home buyers don’t disclose crypto accounts, as it is voluntary and not required.” Also, there’s still some stigma attached to cryptocurrencies. To qualify for loans and to get cleared by real state agencies, “Most home buyers are liquidating crypto gains well ahead of purchasing a home for the funds to appear “seasoned” during underwriting (typically sitting two to three months in a traditional checking or savings account).”
Related Reading | The Game Changer: Real Estate Investment for Everyone
So, are crypto and the housing market in a bubble? They may very well be, but we can’t be sure. This informal study’s conclusion is that the cryptocurrency market is probably feeding the housing market’s growth. To what degree? That’s the million-dollar question.
Featured Image by June on Unsplash - Charts by TradingView
“Bitcoin is a bubble” is something that has been thrown around a lot ever since the last bull run began in 2017. A lot of prominent personalities in the finance industry took this stand when the digital asset hit its then all-time high of $19K. The bear market that followed seemed to validate this for the next few years. Then the bull run of 2020 started and a lot of those sentiments were put on the back burner. But now, John Paulson has come to hit the market with the same thing.
Related Reading | Here’s How Much Your $1,200 Stimulus Check Would Be Worth In Various Cryptocurrencies In 2021
Over a decade ago, billionaire John Paulson had bet against the housing market. Paulson had reportedly made his fortune from carefully placed bets against the housing market in 2007. The billionaire had used credit default swaps to bet against the housing market, which looked to be in its subprime. By 2010, Paulson himself had made $4.9 billion from his bet. The complete total Paulson made for himself and his clients from shorting the market in 2007 came out to about $20 billion, making it one of the biggest fortunes ever made in the history of Wall Street.
Paulson was on Bloomberg’s Wealth with David Rubenstein to talk about trading and financial markets. Paulson remained bullish on gold, as he has been for a number of years now, which he believed is coming into its moment. The billionaire although had nothing good to say about cryptocurrencies. Cryptos received harsh criticism from Paulson, where he stated, “I am not a believer in cryptocurrencies.”
Related Reading | Deloitte Survey Shows 76% Of Finance Execs Think Physical Money Is Nearing Its End
Paulson then went on to call cryptocurrencies a “bubble.” Paulson attributed the value of cryptocurrencies to the high demand for them. One could argue that this is the way economics works. Demand always plays the biggest role in how something is valued. Paulson also explained that there were way too many downsides to bitcoin. He added that the digital asset was just too volatile too short. Hence, the short methods
“I would describe cryptocurrencies as a limited supply of nothing. There is no intrinsic value to any of the cryptocurrencies.”
Although Paulson spoke critically on other investments like SPACs, he was harshest on bitcoin. The billion said that cryptocurrencies “will eventually prove to be worthless.”
Paulson’s track record after his famous 2007 short has not been noteworthy. Although his assets under management grew after the notoriety he gained from that trade, it soon dwindled down as investors pulled out their money. In 2019, Paulson went from managing $38 billion to only about $9 billion assets under management, at this point mostly managing his own money. So Paulson turned his hedge fund into a family office.
BTC has surpassed gold year over year | Source: BTCUSD on TradingView.com
Paulson is bullish on gold, despite the fact that bitcoin has outperformed the asset consistently over the past decade. While gold has brought consistently negative results to its investors, bitcoin has returned over 200% year over year in returns.
Featured image from Bitcoinist, chart from TradingView.com