By Suban Abdulla
LONDON (Reuters) - Asking prices for British homes fell in June for the first time in six years, indicating an earlier-than-usual summer slowdown amid mortgage market turmoil and expectations of further Bank of England interest rates increases, a survey showed on Monday.
Property website Rightmove said the drop was very small - 82 pounds ($105), or close to zero in percentage terms - but it was nonetheless the first monthly decline in asking prices this year and the first drop seen in the month of June since 2017.
Average asking prices over the previous decade for this time of the year had increased by 0.6% on average, the survey showed. Compared with a year earlier, asking prices were 1.1% higher
Tim Bannister, director of property science at Rightmove, said this week's inflation figures and BoE interest rates decision, which will be published Wednesday and Thursday respectively, could spell more changes for the housing market.
"We expected some more twists and turns this year and we've had several in the last month, including stubbornly high inflation figures, surprisingly large average wage increases, and their eventual impact on mortgage interest rates and availability," Bannister said.
British mortgage lenders have in recent days and weeks repeatedly repriced or pulled home loan offerings as higher consumer price inflation and wage growth spurred markets' expectations that the BoE's interest rate-rising cycle, which began in December 2021, will continue for longer.
Nationwide, Halifax and HSBC (LON:HSBA) were some of the major lenders that have announced a shake-up in their mortgage rates.
The Bank of England is expected to raise interest rates for the 13th meeting in a row on Thursday to 4.75%, and financial markets largely forecast Bank Rate to peak at 5.75% by December, up from 4.5% now.
Separate analysis from the Resolution Foundation think tank, published on Saturday, suggested average annual mortgage repayments for households which remortgage next year were on course to rise by 2,900 pounds, up from the 2,000 pounds forecast in May.
British homebuyers typically take out mortgages with an interest rate that is fixed for two or five years, and then remortgage on to a new fixed rate or accept a floating rate.
While Britain's housing market activity recovered in early 2023 from the autumn turmoil triggered by the economic agenda of former prime minister Liz Truss, analysts are waiting to see how much interest rates rises will hurt the sector.
Bannister said the increases in interest rates and monthly mortgage payments could prompt prospective buyers to pause.
However, higher mortgages rates had yet to affect buyer demand in June, although there was a slight impact on sales activity.
($1 = 0.7819 pounds)