How will the recent upheaval amongst the Banks affect the UK Housing Market?

If you’ve been reading the news over recent weeks, you’ll be aware of the global banking challenges and the dramatic collapse and takeover of several Banks.

Given the current high-interest rates and the rising cost of living, you may feel concerned that this will harm the UK housing market and add further pressure to our economy.

In this article, we want to explain what is going on, and how it could affect the housing market in the UK. We also want to share our thoughts on why this is unlikely to have a dramatic effect on the housing market in Bath, Bradford-on-Avon, Wiltshire, and Somerset.

What is going on with the current banking upheaval?

To explain, the global banking system experienced a dramatic problem back in March when several banks collapsed or were taken over.

In the USA, Silicon Valley Bank (the 16th largest in the US) and Signature Bank both dramatically collapsed whereas, in Switzerland, Credit Suisse was rescued by USB. These huge and worrying failures sent shock waves around the world, especially because Swiss Banking is well known for its stability.

People quickly withdrew their money, worried that they could lose substantial amounts of money or even fail financially because of this global banking crisis.

However, we shouldn’t experience the same dramatic crash over here in the UK because, after the last financial crisis in 2008, new regulations were introduced so that banks were better capitalised.

Additionally, UK deposit protection was increased from £35,000 to £85,000 at this time, protecting almost ⅔ of British households. Banks are also structured differently so the same issues shouldn’t affect our banking system.

Unfortunately, this wasn’t the case over in the USA because Trump had previously loosened regulations on lenders with assets below $250bn so businesses and customers felt a greater impact.

Although the UK housing market is unlikely to feel the direct impact of the current global banking crisis, global market turbulence could still send ripples across the financial world. If potential property buyers and sellers react negatively to these conditions, we could see the problem worsen.

Why are people concerned about the global banking upheaval?

Individuals and businesses are worried about the additional impact that the unsettled global banking situation could have on the cost of living and interest rates.

Here in the UK, we experienced an interest rate rise from 4% to 4.25% in March 2023 as the government attempted to control the rising cost of living.

This meant that homeowners faced significantly higher monthly mortgage repayments if they were on variable-rate mortgages. According to an analysis by Nationwide, the average first-time buyer spent 39% of their gross wages on mortgage payments in the final quarter of 2022.

Of course, when the cost of living is high, individuals and businesses are also more likely to reduce their overall spending to help ease the pressure. The economy can suffer as a result, businesses can fail, unemployment can increase and people become concerned about their future financial stability.

As you can see, if we dramatically react to these circumstances, we could end up worsening the global banking problems and the state of the economy.

However, hope is on the horizon as banks believe that rising interest rates and soaring inflation rates are near their peak. On 15th March 2023, Chancellor Jeremy Hunt said he expected to fall back to 2.9% by the end of the year.

This could be the financial break we are looking for and help breathe new life into our economy and ease any potential impact on the UK housing market.

Are the banking problems affecting the housing market in Bath, Bradford-on-Avon and Somerset?

House prices in Bath, Bradford-on-Avon and Somerset remain relatively unaffected by the economic downturn and recent banking upset, despite what might be happening in the rest of the country.

Here are the principal reasons why you needn’t be worried about buying or selling a property in the area.

1. House prices remain stable in Bath

While UK house prices dropped during 2022, prices continued to rise in Bath with an average property now selling for £608,109.  Our experience of the local market is that properties valued between £500,000 and £1.5 million are currently generating a lot of interest and selling fast. 

2. Mortgage rates aren’t as high as you might think

Many homeowners did see their monthly mortgage repayments continue to rise at the beginning of the year if they were on a variable or tracker mortgage. However, this is a trend that looks set to be resolved over the coming months.

Lenders had already factored in the interest rate increase in March 2023 so mortgage rates shouldn’t increase significantly and could even decrease.

Rightmove’s mortgage expert, Matt Smith said “We’ve seen reductions of up to 0.05% in average mortgage rates compared to this time last week, as lenders begin to respond to the Bank of England’s decision. Prices have reduced across all Loan To Value (LTV) ranges, for both two- and five-year fixed deals.

There are also many good mortgage deals available, especially if you’re looking to switch to a fixed-rate mortgage. If you’re considering buying a home in Bath, Bradford-on-Avon, Wiltshire, or Somerset, we recommend you act now so you can take advantage. If you’ve already received a mortgage offer from a UK lender, don’t worry. You can still check for a better deal before you accept.

3. The housing market here is busier than ever

The high levels of demand and low levels of supply in Bath, Bradford-on-Avon, Wiltshire, and Somerset mean that the housing market continues to thrive in our area.

Here at Cobb Farr, we’re even busier than we were this time last year. We’re also more active than we have been in the previous 7-8 months with plenty of listings, strong sales and good footfall in our offices.

This is partly because demand for property in the area has continued to grow while people wait to see what the economy does. There has also been a pent-up demand for property in our area since Covid. This is now starting to surface, with potential buyers more confident about making a move. With the forecast for inflation going down in the next 12 months and the economy showing signs of picking up, we’re expecting a strong year of sales.


Even though the global banking upheaval feels like yet another blow to the economy, it’s unlikely to impact severely on UK banks or the UK housing market. Lots of lessons have been learned since the last banking unrest and although there is a bound to be uncertainty, we are unlikely to see the same problems that we did back in 2008 and 2009.

With properties still in high demand and selling at high prices, and interest rates and the rate of inflation expected to slow significantly over the coming months, it’s the ideal time to buy or sell a home in Bath, Bradford-on-Avon, Wiltshire, and Somerset.

Need trusted, professional, independent help when buying or selling a home? Contact our friendly team today.

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