Housing & mortgage round up: Interest rates on hold and house prices rise

A packed week for housing and mortgage stories with some good news thrown in for a change.

The Bank of England have kept interest rates on hold and two surveys show a rise in house prices.

First time buyers also feature heavily this week, although the news is more mixed for this beleaguered group of would be homebuyers.

Bank of England leaves interest rates unchanged

In an unsurprising move, which will please borrowers with tracker mortgages, the Bank of England left interest rates on hold at 0.5%.

The Bank also announced a £50 billion extension to the existing Quantitative Easing (QE) program in a bid to further stimulate the stagnant economy.

Volatile house prices

Two surveys this week showed that house prices may be on the rise.

The Land Registry, which is often seen as producing the most reliable house price survey, showed a rise in prices of 0.5% in May and an annual rise of 0.4%.

Read the whole story about the Land Registry house price survey by clicking here.

The Halifax house price survey showed an even steeper rise, indicating that house prices rose by 1% in June. However, the Halifax are still showing a 0.5% fall in house prices over the past year.

The Land Registry now puts value of the average house at £161,677, close to the Halifax’s figure of £162,417.

House prices are clearly still volatile, with experts putting this down to lower volumes of house sales skewing the monthly figures. The three monthly average is being seen by more and more people as a better indicator of the general trend; to the end of June the Halifax three month figure showed that house prices had fallen by 0.5%.

Housing market “fragile”

Despite the Halifax and Land Registry reporting a rise in house prices, another survey, by the National Association of Estate Agents (NAEA), has said that the housing market continues to be stagnant and that the situation for first time buyers is particularly “fragile”.

The NAEA said this week that the number of properties sold to first time buyers fell in May to the lowest level for seven months. Whilst this is probably a result of the government ending the Stamp Duty holiday for first time buyers it is nevertheless a worry as first time buyers are generally seen as the lifeblood of the housing market.

The problem for first time buyers seems to be their ability to obtain a suitable mortgage, which has been reduced following the credit crunch as mortgage lenders tightened their criteria whilst insisting on larger deposits.

Mark Haywood, President of the NAEA said: “At what is a very turbulent time for the economy both here and in the eurozone, which has prompted tighter mortgage restrictions from the major banks and placed increased pressure on household finances, the government should be doing all it can to stimulate housing market activity.”

But Rightmove believe number of first time buyers is rising

Perhaps contrary to the findings of the NAEA, the property website, Rightmove, believe that the number of first time buyers could actually be rising.

In a recent survey of 20,000 would be homebuyers, Rightmove found that 28% of the people registered on their site, who planned to buy a home within the next 12 months, were first time buyers. This is the highest level since 2009, but still well below levels seen in the housing boom when up to 40% of people were buying a property for the first time.

The rise in the number of first time buyers is perhaps surprising given the challenges they face in securing a mortgage and raising a large enough deposit to buy a home.

It also appears that first time buyers are getting younger, with the average age dropping one year to 31 according to Rightmove.

Building societies v banks, who do you want to provide your mortgage?

The Daily Telegraph has reported that mortgage lending by building societies is rising faster than by banks.

In the first five months of the year gross mortgage lending by building societies has risen by 40%, whilst banks have seen only a 4% rise.

The newspaper also found that 60% of ‘best buy’ mortgages were offered by building societies who also seem to be offering more affordable mortgages to first time buyers.

Adrian Coles, director-general of the Building Societies Association, said: “The mutual sector is giving a strong signal that it is open for business to all types of borrower whether buying a property for the first time or remortgaging.”

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