A tumble in UK house prices this year began to look a racing certainty when the biggest mortgage bank forecast they would fall 7%. That call from Lloyds Bank comes on top of similar predictions from Nationwide (5%) and Santander (10%).
At the fringes of finance, wilder talk of a spectacular crash has been heard but that seems unlikely to transpire given housing shortages and a recovery in the mortgage market. Lloyds boss Charlie Nunn was talking as he unveiled profits of £6.9 billion for the year, which is flat on last year, though the fourth quarter was spectacular. Profits for the last three months near doubled to £1.8 billion, figures that are unlikely to reduce complaints that banks are profiteering while interest rates rise.
The biggest high street bank set aside £1.5 billion to cover bad debts and admits that some customers are already in trouble. There’s also a looming “mortgage shock” for 200,000 Lloyds customers due to exit a fixed rate deal this year. Nunn was paid £3.8 million, but that is down from a year ago when he got compensation for shares he gave up when leaving previous employer HSBC.
Nunn is optimistic that those forced to refinance in the period just after the mini-budget should at least be able to get a cheaper loan next time. Bank of England interest rates may not have peaked, but fixed rate mortgage deals look cheaper from here on, he said.