Latest news with #CapitalEconomics
Yahoo
a day ago
- Business
- Yahoo
Falling home prices are raising the risk of a deeper correction as the housing market cracks under high mortgage rates
Recent housing market indicators show persistent weakness in home prices, including consecutive month-over-month declines. That's as housing supply has increased while demand has stayed tepid amid still-high mortgage rates hovering around 7%. The slump in prices raises the risk of a prolonged downturn, according to Capital Economics. The housing market has largely been frozen since mortgage rates shot up a few years ago, but recent indicators have pointed to the possibility of an extended slump in prices. The latest Case-Shiller home price report showed a 0.3% monthly fall in the 20-city index in April, steeper than March's downwardly revised 0.2% dip. In a note on Tuesday, Thomas Ryan, North America economist at Capital Economics, warned that the back-to-back declines could signal a 'deeper correction' ahead. 'After falling in March, the further 0.3% m/m decline in house prices in April raises the risk that prices are entering a sustained downturn, as the market finally buckles under the weight of near-7% mortgage rates,' he added. On a three-month annualized basis, house prices fell by 0.4%, Ryan noted. And while prices are up on a year-over-year basis, it's still the slowest pace since August 2023 The Case-Shiller data isn't the only red flag, as the FHFA price index showed a 0.4% monthly drop. 'Clearly, the existing homes market is losing momentum as demand remains anemic due to sky-high borrowing costs, while more people put their home up for sale, forcing sellers to adjust their price expectations,' Ryan wrote. Previous data also line up with a downtrend. The median sale price of an existing home has dropped for five consecutive months on a seasonally adjusted basis. That's as the number of homes available for sale is back around pre-pandemic levels. To be sure, lower prices also make homes more attractive, potentially spurring more demand and representing some relief for younger Americans who are looking to buy but have been priced out of the market. But economists at Citi Research flagged ongoing headwinds, attributing the price declines to high mortgage rates, elevated uncertainty, softening consumer demand, and a weakening labor market. In addition, slowing activity in the housing sector overall is an early sign that underlying demand is weakening this year, Citi said in recent note. 'While prices could still fluctuate month-to-month, consistent softening in median sale prices suggests the trend is likely to continue in more stable measures of new home prices like the Case Shiller index,' economists predicted. Capital Economics said there are still some reasons to believe a prolonged downturn can be avoided. Ryan pointed out at that supply remains relatively tight overall, despite some expansion lately. Meanwhile, the mortgage market is also healthy, reinforced by more than a decade of stricter lending standards instituted after the Great Financial Crash. Plus, continued resilience in the labor market should prevent forced selling in the housing market, he added. 'All that being said, the weakness of the recent price data mean that we have to start taking the prospect of an extended period of house price declines more seriously, which is something we will be considering for our upcoming US Housing Outlook,' Ryan said. This story was originally featured on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
a day ago
- Business
- Yahoo
Falling home prices are raising the risk of a deeper correction as the housing market cracks under high mortgage rates
Recent housing market indicators show persistent weakness in home prices, including consecutive month-over-month declines. That's as housing supply has increased while demand has stayed tepid amid still-high mortgage rates hovering around 7%. The slump in prices raises the risk of a prolonged downturn, according to Capital Economics. The housing market has largely been frozen since mortgage rates shot up a few years ago, but recent indicators have pointed to the possibility of an extended slump in prices. The latest Case-Shiller home price report showed a 0.3% monthly fall in the 20-city index in April, steeper than March's downwardly revised 0.2% dip. In a note on Tuesday, Thomas Ryan, North America economist at Capital Economics, warned that the back-to-back declines could signal a 'deeper correction' ahead. 'After falling in March, the further 0.3% m/m decline in house prices in April raises the risk that prices are entering a sustained downturn, as the market finally buckles under the weight of near-7% mortgage rates,' he added. On a three-month annualized basis, house prices fell by 0.4%, Ryan noted. And while prices are up on a year-over-year basis, it's still the slowest pace since August 2023 The Case-Shiller data isn't the only red flag, as the FHFA price index showed a 0.4% monthly drop. 'Clearly, the existing homes market is losing momentum as demand remains anemic due to sky-high borrowing costs, while more people put their home up for sale, forcing sellers to adjust their price expectations,' Ryan wrote. Previous data also line up with a downtrend. The median sale price of an existing home has dropped for five consecutive months on a seasonally adjusted basis. That's as the number of homes available for sale is back around pre-pandemic levels. To be sure, lower prices also make homes more attractive, potentially spurring more demand and representing some relief for younger Americans who are looking to buy but have been priced out of the market. But economists at Citi Research flagged ongoing headwinds, attributing the price declines to high mortgage rates, elevated uncertainty, softening consumer demand, and a weakening labor market. In addition, slowing activity in the housing sector overall is an early sign that underlying demand is weakening this year, Citi said in recent note. 'While prices could still fluctuate month-to-month, consistent softening in median sale prices suggests the trend is likely to continue in more stable measures of new home prices like the Case Shiller index,' economists predicted. Capital Economics said there are still some reasons to believe a prolonged downturn can be avoided. Ryan pointed out at that supply remains relatively tight overall, despite some expansion lately. Meanwhile, the mortgage market is also healthy, reinforced by more than a decade of stricter lending standards instituted after the Great Financial Crash. Plus, continued resilience in the labor market should prevent forced selling in the housing market, he added. 'All that being said, the weakness of the recent price data mean that we have to start taking the prospect of an extended period of house price declines more seriously, which is something we will be considering for our upcoming US Housing Outlook,' Ryan said. This story was originally featured on
Entrepreneur
3 days ago
- Business
- Entrepreneur
Should You Borrow Now or Wait?
Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur United Kingdom, an international franchise of Entrepreneur Media. UK interest rates remain at a 16-year high. Inflation is finally easing, but the economic outlook is still uncertain. For many small and medium-sized businesses, 2025 has become a year of financial limbo, a moment to pause and ask a critical question: Should we borrow now, or hold off and wait for better conditions? The answer isn't straightforward. On one hand, business confidence is slowly returning, with growing demand for larger loans to fund expansion, relocation, and recovery. On the other, the cost of borrowing remains steep, and lenders are still cautious about who they approve. With the landscape changing fast, knowing when to make your next move and how to prepare for it could make all the difference. Interest Rates Are Likely to Fall, But Not Dramatically After holding steady at 5.25% from August 2023 to May 2025, the Bank of England reduced the base rate to 4.25% on the 8th of May 2025. This marks the first cut in nearly a year, and a one per cent decline over the past 12 months. While this is welcome news for borrowers, experts are warning against expecting dramatic changes. Inflation remains at 3.4%, still above the banks 2% target, and future rate cuts are expected to be gradual. "We think the Bank Rate will be cut to 3.75% by mid-2026," says Ruth Gregory, Deputy Chief UK Economist at Capital Economics. For SMEs considering whether to borrow now or wait, this means potential savings may be marginal, especially when set against time-sensitive opportunities like growth, relocation, or acquisitions. Demand for Funding Is Starting to Rise Again Despite high rates, some businesses aren't waiting. Iwoca's Q1 2025 SME Expert Index found that 42% of brokers expect demand for loans over £100,000 to increase this year, particularly among businesses looking to expand or relocate. At the same time, net lending to SMEs fell by £1.2 billion in Q1 2025, according to the Bank of England, showing that while some SMEs are still hesitant to borrow, others are taking advantage of less competition. If rates begin to fall later this year, as many expect, lenders may receive a flood of applications. Businesses that wait too long could find themselves up against more applicants and tighter lending criteria when they finally decide to act. Expansion Opportunities Might Not Wait for Cheaper Money Some of the best growth opportunities appear in periods of uncertainty. Whether it's securing a discounted lease, acquiring a struggling competitor, or investing in undervalued assets, timing is everything, and in many cases, delaying a decision for marginally cheaper borrowing could mean missing out altogether. "A lot of SMEs wait for the 'perfect' conditions, but by the time they arrive, the opportunity's gone," says Callum Scott, Managing Director at Winchester Corporate Finance. In this context, SMEs with strong growth plans may benefit more from acting early than holding out for small rate drops. Cheaper borrowing can be helpful, but it's no substitute for momentum or market opportunity. Lenders Are Looking for Financial Discipline, Not Just Ambition Even as some lenders start to open their books again, they remain cautious. The British Business Bank reports that only 43% of smaller businesses secured external finance in 2024, down from 50% in 2023. Among those referred to alternative lenders through the UK's bank referral scheme, success rates are still very low. Meanwhile, the Federation of Small Businesses says that 1 in 3 loan applications are rejected due to poor preparation or unclear financials. Lenders want more than a promising growth story; they want to see clean, well-managed accounts and a clear repayment strategy. If you're not confident about your business's financials, from cash flow to forecasts, this may be a good time to pause, plan, and get lender-ready before you apply. That means tightening up your balance sheet, cutting reliance on overdrafts, and forecasting realistically. Being 'Funding Ready' Takes Time, Start Now Either Way Whether you're planning to borrow in the next quarter or not until 2026, the groundwork for a successful funding application needs to start well in advance. Many SMEs only start preparing when they urgently need cash, but by that point, it's often too late to tidy up the numbers or resolve red flags. Lenders want to see consistency and control. That means reducing reliance on short-term fixes like overdrafts, paying suppliers on time, staying up to date with Companies House filings, and having a clear, realistic plan for how the funding will be used and repaid. These aren't just one-off actions; they reflect how your business is run day to day. "Being lender-ready isn't about box ticking, it's about financial habits," says Callum Scott. "If your accounts are solid, your forecasts make sense, and your repayment strategy is clear, you're already ahead of most applicants." Even if you choose to hold off on applying for now, laying that financial foundation puts you in a stronger position when the time comes. It can also help you move faster when opportunities arise without scrambling to fix things at the last minute. For some businesses, the right time to borrow is now. For others, it's later. But in both cases, the smartest move is to start preparing today. Because when the moment comes, the businesses that succeed won't necessarily be the ones that waited; they'll be the ready ones.
Shafaq News
5 days ago
- Business
- Shafaq News
Oil rises as markets weigh fragile Israel-Iran ceasefire
Shafaq News/ Oil prices climbed on Wednesday as investors assessed the stability of a ceasefire between Iran and Israel, but held near multi-week lows on the prospect that crude oil flows would not be disrupted. Brent crude futures rose 85 cents, or 1.3%, to $67.99 a barrel at 0341 GMT, while U.S. West Texas Intermediate (WTI) crude gained 87 cents, or 1.4%, to $65.24. Brent settled on Tuesday at its lowest since June 10 and WTI since June 5, both before Israel launched a surprise attack on key Iranian military and nuclear facilities on June 13. Prices had rallied to five-month highs after the U.S. attacked Iran's nuclear facilities over the weekend. "Global energy prices are moderating following the Israel-Iran ceasefire. The base case for our oil strategists remains anchored by fundamentals, which indicate sufficient global oil supply," said JP Morgan analysts in a client note. U.S. airstrikes did not destroy Iran's nuclear capability and only set it back by a few months, according to a preliminary U.S. intelligence assessment, as a shaky ceasefire brokered by U.S. President Donald Trump took hold between Iran and Israel. Earlier on Tuesday, both Iran and Israel signalled that the air war between the two nations had ended, at least for now, after Trump publicly scolded them for violating a ceasefire. As the two countries lifted civilian restrictions after 12 days of war - which the U.S. joined with an attack on Iran's uranium-enrichment facilities - each sought to claim victory. "The Israel-Iran ceasefire is likely to prove fragile. But so long as both parties show themselves unwilling to attack export-related energy infrastructure and/or disrupt shipping flows through the Strait of Hormuz, we expect bearish fundamentals in the oil market to continue ... from here," said Capital Economics chief climate and commodities economist David Oxley. Direct U.S. involvement in the war had investors worried about the Strait of Hormuz, a narrow waterway between Iran and Oman, through which between 18 million and 19 million barrels per day (bpd) of crude oil and fuel flow, nearly a fifth of global consumption. Investors awaited U.S. government data on domestic crude and fuel stockpiles due on Wednesday. Industry data showed U.S. crude inventories fell by 4.23 million barrels in the week ended June 20, market sources said, citing American Petroleum Institute figures on Tuesday.
Business Recorder
5 days ago
- Business
- Business Recorder
Oil prices rise as investors assess Iran-Israel ceasefire
Oil prices climbed on Wednesday as investors assessed the stability of a ceasefire between Iran and Israel, but held near multi-week lows on the prospect that crude oil flows would not be disrupted. Brent crude futures rose 85 cents, or 1.3%, to $67.99 a barrel at 0341 GMT, while US West Texas Intermediate (WTI) crude gained 87 cents, or 1.4%, to $65.24. Brent settled on Tuesday at its lowest since June 10 and WTI since June 5, both before Israel launched a surprise attack on key Iranian military and nuclear facilities on June 13. Prices had rallied to five-month highs after the US attacked Iran's nuclear facilities over the weekend. 'Global energy prices are moderating following the Israel-Iran ceasefire. The base case for our oil strategists remains anchored by fundamentals, which indicate sufficient global oil supply,' said JP Morgan analysts in a client note. US airstrikes did not destroy Iran's nuclear capability and only set it back by a few months, according to a preliminary US intelligence assessment, as a shaky ceasefire brokered by US President Donald Trump took hold between Iran and Israel. Earlier on Tuesday, both Iran and Israel signalled that the air war between the two nations had ended, at least for now, after Trump publicly scolded them for violating a ceasefire. As the two countries lifted civilian restrictions after 12 days of war - which the US joined with an attack on Iran's uranium-enrichment facilities - each sought to claim victory. Oil prices drop 6pc 'The Israel-Iran ceasefire is likely to prove fragile. But so long as both parties show themselves unwilling to attack export-related energy infrastructure and/or disrupt shipping flows through the Strait of Hormuz, we expect bearish fundamentals in the oil market to continue … from here,' said Capital Economics chief climate and commodities economist David Oxley. Direct US involvement in the war had investors worried about the Strait of Hormuz, a narrow waterway between Iran and Oman, through which between 18 million and 19 million barrels per day (bpd) of crude oil and fuel flow, nearly a fifth of global consumption. Investors awaited US government data on domestic crude and fuel stockpiles due on Wednesday. Industry data showed US crude inventories fell by 4.23 million barrels in the week ended June 20, market sources said, citing American Petroleum Institute figures on Tuesday.
