Falling UK house prices this year started to look like a certainty of the race today when the biggest mortgage bank predicted they would fall by 7%.
This call from Lloyds Bank comes on top of similar predictions from Nationwide (5%) and Santander (10%).
On the fringes of financials, wilder talk of a spectacular crash has been heard, but that seems unlikely given the housing shortage and a recovery in the mortgage market.
Lloyds boss Charlie Nunn spoke as he unveiled profits of £6.9billion for the year, which was flat on last year, although the fourth quarter was down spectacular.
Earnings for the past three months have nearly doubled to £1.8bn, figures that are unlikely to dampen complaints that banks are profiting as interest rates rise.
The biggest high street bank has set aside £1.5billion to cover bad debts and admits some customers are already struggling.
CEO Charlie Nunn said: “20% of customers have to make tough decisions, cancel subscriptions, move to valuable brands. We focus on clients who are going to experience an income shock. »
There is also a looming “mortgage shock” for 200,000 Lloyds customers due to the exit from a fixed rate deal this year.
Nunn received £3.8m, but that’s down from a year ago when he won compensation for shares he gave up on leaving former employer HSBC.
The fallout from Liz Truss’ disastrous mini-budget in September continues, with all banks raising the cost of loans and offering the best deals.
Nunn is optimistic that those forced to refinance in the period right after the mini-budget should at least be able to get a cheaper loan next time around. Bank of England interest rates may not have peaked, but fixed-rate mortgages look cheaper as of now, he said.
Nunn believes that while this year will be difficult for many, it will be “nothing like the financial crisis, more like the recessions we experienced closer to the turn of the century.”
The bank said: “While the macroeconomic outlook remains uncertain, our people, our business model and our financial strength enable us to continue to support our customers.”
Lloyds shares fell 1p to 50p. Over five years, they are down nearly 30%.
Investec’s Ian Gordon notes the shares are trading at a discount to rivals NatWest and HSBC. There is a £2bn share buyback, but critics note the share price seems stubbornly stuck around the 50p level.
Lloyds Net Interest Margin – the difference between what it pays savers and what it charges borrowers has fallen from 2.54% to 2.94%.
The increase in bank NIMs has led to criticism that savers are penalized.
Nunn insists it is a competitive market and says most customers stay with Lloyds.
The dividend is 2.4p versus 2p. About 600,000 Britons own Lloyds shares.
The staff bonus pot is up 12% to £446million.