Mortgage & Housing Round Up: House prices rise, but mortgage approvals fall


Housing & mortgage round up_istockphotoAn interesting week for housing and mortgage news.

We start with the Bank of England’s interest rate announcement, which brought no surprises and then move on to the latest house price figures from the Halifax and some confusing mortgage approvals data.

Bank Base Rate on hold

Unsurprisingly the Bank of England’s Monetary Policy Committee (MPC) decided to leave base rate on hold at 0.50% for yet another month.

With the new Governor, Mark Carney, due to take up his position in July, it appears that the MPC is in a holding pattern until he takes over, although with mixed economic and housing data, it is perhaps doubtful whether any change would have taken place anyway.

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House prices on the rise

The latest Halifax House Price Index figures show an increase over the past month, quarter and year.

According to the UK’s largest mortgage lender, house prices rose by 0.2% in March, by 1.2% over the past quarter and by 0.8% during the past 12 months.

The Halifax now puts the value of the average home at £163,943.

Commenting on the figures Martin Ellis, Housing Economist at the Halifax, said: “The housing market continues to show signs of modest improvement. Prices in the first three months of 2013 were 1.2% higher than in the preceding quarter (fourth consecutive increase). Prices were 1.1% higher than in the first three months of 2012. House sales also continued to rise, according to the latest industry-wide figures.”

Read more on this story by clicking here.

Confusing mortgage data

Whilst figures from the Halifax and Nationwide show house prices are rising, the number of mortgage approvals fell in February, sparking fears that the fragile recovery in the housing market is stalling.

Figures from the Bank of England show 51,653 mortgages were approved in February, the lowest number for five months. The Bank’s data was backed up by recent figures from the British Bankers Association (BBA), who said mortgage lending in February was at the lowest level since the summer.

The Bank’s figures show that some major high street lenders, including Lloyds, Santander and HBOS all lent less money in the final quarter of 2012, compared to the previous three months.

However, the Building Societies Association (BSA) reported a big increase this week in the amount of money being lent by its members. According to the BSA lending by building societies in February was up 29% on the same time last year.

Mortgage experts say that whilst on the face of it the figures look confusing, it could simply be a case of banks cutting back on their mortgage lending, with building societies stepping in to take up the slack.

Experts will also hope that the recently announced Help to Buy scheme, will provide the mortgage market with a seemingly much needed boost as we head into the Spring and Summer.

However, not everyone thinks the Help to Buy scheme is needed. Paul Broadhead, from the BSA, said: “If all lenders acted to help first-time buyers and other creditworthy borrowers with smaller deposits, as mutuals have done consistently over the last year and more, this intervention would not be needed.”

Tenants finding life tough

The number of tenants finding themselves in serious arrears rose significantly over the past three months.

Serious arrears is defined as owing more than two months’ rent and now affects 94,000 tenants, up 4,000 during the first quarter of 2013.

The figures come from the Tenants Arrears Tracker and are produced by chartered surveyors, Templeton LPA.

The rise over the past quarter in tenants suffering serious arrears is disappointing, after a fall in the previous three months and a decrease of 2.9% over the past year.

Many tenants are also would-be first time buyers, who are struggling to get onto the housing ladder, held back by a combination of rising rents and stricter lending criteria, which is seeing mortgage lenders still requesting larger deposits, often out of reach of first time buyers.

Paul Jardine, Director at Templeton LPA, said: “Household finances are feeling the impact of spiralling costs, particularly energy bills, which were recently predicted to grow by an average £214 this year.”

Jardine continued: “Many tenants have finally pulled their finances back together after the strain of the festive period. But for a significant minority the situation is actually much worse than three months ago, and this is reflected in the most severe tenant arrears.”

Mortgage rates will continue to fall

If the Bank of England is prediction is right there is good news for homebuyers just around the corner.

According to the Bank’s latest credit conditions survey, mortgage rates are set to fall further during 2013, after reductions in the first three months of the year.

The Bank said there were a variety of reasons behind the lower mortgage rates, including the Funding for Lending Scheme (FLS), which offers mortgage lenders a cheaper source of finance, and increased competition from banks and building societies.

The report also contained a sliver of good news for first time buyers, as it found lending to people with smaller deposits was “a little more marked”. However, the report also found that a greater number of people were having their mortgage application turned down because of their poor credit score.

With the recent fall in mortgage approvals, experts will hope that the Bank’s prediction is correct and the lower rates will encourage house hunters to take the plunge.

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

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