Housing round up: Demand for property rises, but so do mortgage interest rates


Housing & mortgage round upIn a relatively quiet week for housing news new figures have shown that demand for housing has risen, as has the number of properties coming onto the market.

At the same time mortgage interest rates seem to be on the rise.

Demand for housing hits highest level for two years

The end of the Stamp Duty holiday for first time buyers seems to behind a rise in new enquiries.

Figures from the Royal Institution of Charted Surveyors (Rics) show that 9% more surveyors reported increases rather than decreases in demand, pushing the level of new enquires up to 2010 levels. Although still a long way from the peak of the last housing boom the news is nevertheless encouraging for the housing market.

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The Rics report also showed that more properties came onto the housing market in March, which is essential if increased demand is to translate into purchases.

Simon Rubinsohn, Rics’ Chief Economist, said: “Demand saw a slight boost in March as many first-time buyers looked to beat the stamp duty holiday deadline. There has been a gentle increase in activity across the market in the early part of the year but it remains to be seen is whether this can continue, given the changes in the budget and ongoing problems affecting the economy. London continues to outperform the rest of the UK in terms of prices but, interestingly, the north-west did see an increase in activity in March.”

The news on house prices was less positive however. The Rics survey showed that house prices continued to fall throughout the UK, with the only exception being London.

Mortgage rates rise

Despite the Bank of England holding base rate at 0.5% for over three years, borrowers have been warned that mortgage rates are on the rise.

The Standard Variable Rates charged by many mortgage lenders have been increased in recent weeks and it now seems the interest rates on other mortgage products are on the rise.

Figures from price comparison website, MoneySupermarket, show that the average interest rates for two and five year fixed rates have risen, as have the interest rates on two year tracker mortgages.

The average two year fixed rate is now 4.15%, rising significantly from 3.82% in October last year. The average five year fixed rate has risen by 0.15% .

It is clear that mortgage rates are moving upwards and experts have urged borrowers coming to the end of an existing deal to take swift action to avoid having to lock into a more expensive deal.

Mortgage lenders say that they need to push rates up due to the increased costs of wholesale funding, on which many of them rely.

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