Housing round up: House prices fall amid mixed messages for first time buyers


Housing & mortgage round upThe latest Halifax house price survey is out, first time buyers see a rise in the availability of high loan to value mortgages and the CBI suggest a novel way to help people buy their first home.

Halifax house price survey

The latest Halifax house price survey shows that house prices rose by 1.2% in October; however this seemingly positive news was tempered by the fact that prices actually fell by 0.3% over the past quarter.

Quarterly movements in house prices are generally seen as a less volatile and more accurate picture of the direction of house prices, it is the first time since June that the rolling quarterly figures have seen a drop.

The latest figures from the Halifax show that the average house price in the UK is now £163,311.

Housing experts believe that the latest figures simply confirm the fact that house prices are stagnant and that the market is generally weak. On an annual basis house prices were down by 1.8% compared to the same time last year.

Reacting to the latest figures Martin Ellis, housing economist at Halifax, said that the market had been “highly resilient”.

He continued: “The prospect of exceptionally low official interest rates over the foreseeable future is likely to continue to support the market in the face of a very difficult economic climate,” said Ellis. “Both prices and activity levels are expected to remain close to current levels over the coming few months.”

Pensions to fund deposits for first time buyers?

It is common knowledge that many first time buyers struggle to find a deposit for their new home, the problem has become even more acute in recent years as banks and building societies have tightened their lending criteria and requested even larger deposits.

However, a new report from the CBI which has looked into ways of boosting the housing market has suggested that first time buyers should be allowed to access their pensions to help fund a deposit, which would make it easier to get a mortgage and therefore give a much needed boost to the housing market.

John CridlandJohn Cridland (right), CBI director-general, said: “While we would not want to see a return to overly-risky lending practices and unsustainable personal debt levels, it is important that we get credit flowing to those who need it most.”

Whether the suggestion will become reality though is thought by many experts to be unlikely.

First time buyers see rise in 90% mortgages

Despite the report from the CBI there is some evidence that mortgage lending criteria may be easing for first time buyers, with a rise in the number of mortgages available which require just a 10% deposits.

Previously it was smaller lenders who were offering first time buyers 90% mortgages, however recent weeks have seen some larger lenders look to attract this type of business. There are even a number of deals which only require a 5% deposit.

The Nationwide Building Society is one of the larger lenders to offer higher loan to value mortgages. Martyn Dyson, head of mortgages at Nationwide, said: “On the average property this will bring the level of deposit required down from £24,750 to £16,500, welcome news for first-time buyers and those upsizing to a bigger home.”

However, mortgage experts have been quick to point out that the availability of these higher loan to value deals may not last long.  Pressure on margins and potential problems on the wholesale market, where many lenders obtain funds, may mean such deals will only be around for a relatively short period of time.