The high street lender says while typical homeowners coming off fixed rate deals face significant increases in their monthly payments, borrowers have been 'stress tested' for higher rates and so should be able to cope, meaning there is unlikely to be 'waves of forced selling'.
Prices were fairly stable over the month, rising by a modest 0.1%, reversing a 0.1% month-on-month decline in May.Robert Gardner, Nationwide's chief economist, said:"Longer term borrowing costs have risen to levels similar to those prevailing in the wake of the mini-budget last year, but this has yet to have the same negative impact on sentiment.
"For example, the number of mortgage applications has not yet declined and indicators of consumer confidence have continued to improve, though they remain below long run averages. "The sharp increase in borrowing costs is likely to exert a significant drag on housing market activity in the near term."But he added:"Nevertheless, a relatively soft landing is still possible, providing the broader economy performs as we expect.
"Labour market conditions are expected to remain relatively robust, with the unemployment rate remaining below 5%, while income growth is projected to remain solid. With Bank rate likely to peak in the quarters ahead, longer term interest rates should also start to fall back. "As a result, a combination of healthy rates of income growth and modest price declines should improve affordability over time, especially if mortgage rates moderate."
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