Housing slowdown warning after mortgage rates rise

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The number of people struggling to make their mortgage payments was forecast to hit a 15-year high.

The RICS said that house sales in September hit their lowest level since the height of the swine flu.

House prices will fall this year due to rising mortgage rates.

The Bank of England said the number of people struggling to make their mortgage payments would go up.

In September, new house buyer inquiries fell for the fifth month in a row.

There were fewer properties for sale which helped push up housing prices, but it warned this was likely to end.

Rubinsohn said that although house prices were still rising, storm clouds were gathering over both pricing and sales.

As the economy adjusts to higher interest rates and the tight labour market begins to reverse, it's hard not to see more pressure on the housing sector.

"For now, mortgage arrears and possessions are at historic lows, but they are going to move upwards over the next year, as pressure on homeowners grows," he said.

With high loan-to- value mortgages accounting for a much smaller share of the lending book than in the past, this should help to limit the adverse impact on the market.

Mortgage lending fell between July and September and is expected to fall again in the final three months of the year according to the Bank of England. Between October and December, lending for remortgaging is expected to increase.

After the government's mini-budget in September caused alarm among investors, mortgage rates went up dramatically.

The promise of huge, unfunded tax cuts led to expectations that the Bank will have to raise interest rates more aggressively than previously thought.

Moneyfacts said the two-year fixed mortgage rate was the highest since 2008. The average five-year fixed deal was close to a 14- year high.

If interest rates rose as high as the market expected, many households would struggle, with it hitting both mortgage holders and renters.

Almost half a million households in the UK are in a position where they are more likely to have difficulty paying their debts. They have to spend more than 70% of their take- home pay on mortgage or rent.

By the end of next year, it believes that the percentage will increase to 2.8%.

The Bank's Financial Policy Committee said in a report on Wednesday that rising costs of living and interest rates will make households more vulnerable to shocks.

Unless they can make significant spending cuts, some may find it hard to repay debts.

Households are better placed to deal with financial stress because they have less debt compared to their incomes.

The share of people with high loans to value is lower.

The Bank said that banks are now required to be flexible in their responses to reduce the risk of default.

It predicts that 1.7 million of the country's 11 million mortgage holders will have to change their loans in the next year.

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