Housing & mortgage round up: House prices rise as do mortgage approvals


Housing & mortgage round upTwo house price surveys out this week, both showing a rise in house prices, whilst the number of mortgage approvals has risen and mortgage affordability is improving.

All good news? Well, not quite.

The housing market is still volatile, with any monthly rises being cancelled out by falls, to create a stagnant picture and mortgage finance is becoming even harder to obtain for people without large deposits.

Nationwide: Surprise rise in house prices

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The Nationwide Building Society has surprised most housing experts by saying that house prices actually rose by 1.3% in August.

The rise is the largest monthly increase for over two and a half years and takes the average house price in the UK, according to the building society, to £164,729. However, despite the surprising rise, house prices are still 0.7% lower than this time last year.

The latest data from the building society goes to prove how volatile the housing market currently, with the Nationwide warning against reading too much into one month’s figures.

Robert Gardner, Chief Economist at the Nationwide, said: “The fact that the annual pace of house price decline moderated to minus 0.7% in August from minus 2.6% the previous month provides evidence that conditions remain fairly stable.”

He continued: “This may be explained by the surprising resilience evident in the UK labour market, with further increases in employment in recent months, even though the UK economy has remained in recession.”

The Land Registry agree

The latest Land Registry figures show that house prices rose in July by 0.8% compared to June and were up by 0.3% against the same time last year.

According to the Land Registry the average house in the UK is now worth £162,900.

Whilst they take longer to produce, the Land Registry house price figures are often thought to be more accurate than other surveys, because they include all housing transactions.

The Land Registry figures also showed that the top end of the housing market is booming, with the number of properties sold for over £1m doubling over the past year and house prices in London rising by 6.5% over the past year.

However, houses in other areas of the UK have experienced equally significant falls in value over the past year, with the North East and North West hit hardest with falls of 3.8% and 3.9% respectively.

Mortgage approvals rise

New figures from the Bank of England show that mortgage approvals rose in July, but were still below the monthly average seen so far this year.

The number of mortgages approved, but not yet lent, increased to 47,312 in July, up from 44,124 in June, but was still below the average of around 51,000 per month seen so far this year.

The Bank of England figures echo those issued last week by the Council of Mortgage lenders and demonstrate how volatile the mortgage market currently is, although the overall trend seems to be flat.

The low level of mortgage approvals, compared to trends seen so far this year and since the start of the credit crunch, seem to be down to the ongoing tight lending criteria from mortgage lenders. Whilst the government’s Funding for Lending scheme seems to have had little immediate impact on the availability of higher loan to value mortgages, which most experts believe is the key to reviving the housing market.

Mortgage affordability improves, assuming of course you can get a mortgage!

Despite the fact that mortgages are still hard to obtain for many, with figures from MoneySupermarket showing the number of higher loan to value mortgage products still falling, mortgage affordability is actually improving for those people who can get a loan.

In fact, figures from the Halifax, the UK’s largest mortgage lender, show that mortgages are at their most affordable level for 15 years with new homeowners needing to spend just over 25% of their take home pay on mortgage payments. At their peak mortgage payments were taking up 48% of people’s take home pay.

The Halifax says that the improved affordability had improved in every region of the UK, except Northern Ireland, and was due to lower house prices and all time low interest rates.

Halifax housing economist Martin Ellis said: “The relatively low level of mortgage payments in relation to income is providing support for house prices.”

“The prospect of interest rates remaining at low levels for some time yet is expected to continue to be a key factor supporting the demand for homes, helping to keep house prices around their current level during the remainder of 2012.”

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

Your property may be repossessed if you do not keep up repayments on your mortgage.

For providing mortgage advice we will charge an application fee of £299 and we may also be paid a fee from the lender, any fee paid by the lender will be disclosed to you. Alternatively we will charge an arrangement fee of 0.5% of the loan and refund to you any payment received by us from the lender.