Housing round up: Interest rates remain unchanged whilst house prices rise


Housing & mortgage round upIn a week packed with housing news, the Bank of England have decided to leave interest rates unchanged, although more money will be pumped into the economy.

In other news the Halifax house price survey has found that prices rose in January, whilst mortgage approvals rose in the first month of the New Year.

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Interest rates remain unchanged

As expected the Bank of England’s Monetary Policy Committee (MPC) left interest rates unchanged at 0.5%.

The MPC has now kept base rate unchanged since March 2009 and the news will be welcomed by borrowers with variable rate mortgages.

It was also announced that the Quantitative Easing (QE) program started by the Bank of England in 2009 would be extended by a further £50 billion, taking the total amount of money pumped into the UK economy to £325 billion.

House prices rise in January

Figures from the Halifax show that UK house prices rose by 0.6% in January.

The rise takes the value of the average UK house £160,907; however according to the Halifax prices have still fallen by 1.8% over the last year and by 0.9% in the three months to January.

The Halifax said that prices have remained relatively stable over the past year due to low interest rates, although according to the bank the prospects for 2012 depend on how badly the UK is effected by the Eurozone crisis.

Martin Ellis, chief economist at the Halifax said: “If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012.”

The rise in house prices of 0.6% in January reported by the Halifax is at odds with the 0.2% fall in the same month which the Nationwide revealed last week. The Nationwide house price survey found the average UK house to be worth £162,228, slightly more than the Halifax’s figure.

The two lenders also disagree on the annual change, with the Halifax reporting a fall of 1.8% and the Nationwide a rise of 0.6%.

Repossessions fall to pre credit crunch levels

36,200 homes were repossessed in 2011, the lowest level since the start of the credit crunch in 2007.

The number of repossessions is below the 40,000 predicted by the Council of Mortgage Lenders (CML) and is believed to be due to the low interest rate environment and the stance taken by lenders who are more understanding of the troubles some borrowers are facing.

However, despite the fall the CML believes that rising unemployment will push the number of repossessions higher in 2012, forecasting that repossessions will rise to 45,000 in 2012.

Paul Smee director general of Council of Mortgage LendersDirector general of the CML, Paul Smee, said: “Low interest rates and good arrears management by lenders are helping the vast majority of those borrowers who face difficulties to keep their homes and get back on track.”

He continued: “This will continue, but in the face of wider economic difficulties and rising unemployment, we are concerned that there will be a higher number of people facing more serious problems in 2012.”

In addition to a fall in the number of repossessions the number of borrowers in arrears also fell.

The government this week announced more help for those people struggling to pay their mortgages. Housing minister, Grant Shapps said the government would make a further £19 million available to councils to be used to help struggling homeowners in the form of interest free loans or grants.

Mr Shapps said: “Repossession should only ever be the last resort. No one in financial difficulty should be embarrassed to seek help if they need it.”

Mortgage approvals rise

The number of mortgages approved for the purchase of a property rose in January to 58,610 according to the latest figures from chartered surveyors e.surv.

The number of mortgages approved represents an 11% increase on December and a massive rise of 29% compared to the same month last year.

The number of approvals in January is the highest figure since December 2009 and seems to be a result of a rise in the number of mortgages approved for buyers with smaller deposits.

During the past year high loan to value lending has nearly doubled. In January 2011 just 7% of all loans went to people with a 15% deposit or less, since then the figure has risen to 13%. As a result of the increased availability of high loan to value mortgages the number of loans approved for first time buyers is now rising at a faster rate than those approved for wealthier borrowers.

In January 15,329 mortgages were approved for property’s with a purchase of below £125,000, which are typically bought by first time buyers; an increase of 31% on the same time last year.

Despite the figures the amount of deposit required is still high by historic standards; the average deposit in January 2012 was 38% of the purchase price, up significantly from the 31% average in January 2007.

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

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