Housing & Mortgage Round Up: Two house price surveys, whilst Bank of Ireland angers mortgage holdersWe have two house price surveys this week; one showing a rise in house prices over the past year, the other a fall.

We also look at how the Bank of Ireland has angered 13,500 existing mortgage customers by more than doubling the interest rate they pay.

Finally we bring you news that the UK’s largest buy to let mortgage lender is set to restrict the type of tenants it will allow.

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Land Registry report rise in house prices

The Land Registry has reported that house prices rose by 1% in January, taking the value of the average home in England and Wales to £162,441.

In news which points to an end to the housing slump, it was also reported that house prices are up by 1% on the same time last year, whilst repossession rates have fallen by 11%.

The Land Registry figures are widely believed to be the most accurate, as they include all house sales in England and Wales. As well as reporting an increase in the value of properties over the past year, the Land Registry figures also show that the most expensive property was sold for over £20 million, whilst the cheapest was sold for just £10,000.

Read more about the latest Land Registry House Price Index figures for January by clicking here.

Nationwide reports fall in house prices

Contrary to the Land Registry figures, the Nationwide’s House Price Index has shown a fall in house prices of 1.1% over the past 12 months, despite a rise of 0.2% in January.

According to the Nationwide, the UK’s largest building society, the average home in the UK is now worth £162,638, broadly in line with the figures from the Halifax and the Land Registry.

Drilling down into the Nationwide’s figures, shows that 11 out of 13 regions saw house prices fall over the past 12 months, with only London and the South-West showing an increase.

Responding to the figures Robert Gardener, Nationwide’s Chief Economist, said: “Average UK house prices rose by 0.5% in the final quarter of 2012, after allowing for seasonal effects. Prices were down 1.1% over the year as a whole.”

“Amongst the English regions, London was again the best performing area, with prices up 0.7% compared with Q4 2012. The South West was the only other region to record price growth over the year, with the rest seeing small declines.”

“Within England, the North/South divide in property prices continued to widen, with the price of a typical home in the South now around £95,000 more than in the North, a new high and around 2% more than at the close of 2011.”

Read more about the latest Nationwide House Price Index figures for February  by clicking here.

Bank of Ireland angers thousands by doubling mortgage interest rates

At a time when Bank of England base rate has been stuck at 0.5% for nearly four years, the Funding for Lending Scheme has pushed mortgage rates down even further and speculation about negative interest rates is rife, it is hardly surprising that thousands of mortgage holders have been angered by the Bank of Ireland’s decision to invoke “special conditions” and more than double the interest rate they are being charged.

Citing the need to repair their balance sheet, the Bank of Ireland announced this week that they will increase the margin charged on their Tracker mortgages for 13,500 existing customers.

A spokesperson for the bank said the rate rise was needed due to “the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital”.

For residential customers the increase will come in two stages; from 1st May the differential will increase from 1.75% above bank base rate to 2.5%, with a further rise to a differential of 3.99% coming into effect from 1st October.

For buy to let investors the change is worse, with an increase to 4.49% above bank base rate from 1st May.

The rate change won’t affect customers of the Post Office, who have a link with the Bank of Ireland.

Mortgage experts have described the move as a “kick in the teeth” for Bank of Ireland’s customers, many of whom took out high loan to value mortgages or self-certification loans and will have little choice but to stay with the lender and meet the higher monthly payments.

Mortgage lender to restrict type of acceptable tenants

The UK’s largest buy to let mortgage lender, the Mortgage Works, which is owned by the Nationwide, has announced it will no longer lend to landlords who accept tenants on housing benefit.

The buy to let mortgage market is huge, with nearly four million people in private rented accommodation, 25% of which are on some form of housing benefit. Following the move, housing experts raised concerns that it would reduce the choice available to tenants claiming benefits and could even see some unable to find a suitable home.

Responding to the news, Richard Lambert, of the National Landlords Association (NLA) said: “There is a great deal of demand from tenants in receipt of housing allowance and if the private-rented sector doesn’t help to support housing provision, many tenants will be left homeless.”

Mr Lambert continued: “With many local authorities struggling to meet the need for affordable housing, private-residential landlords often help to meet the need and let to LHA recipients. However, with some mortgage companies refusing to lend to landlords with LHA tenants, letting to this market can be difficult; it is only really an option if the landlord owns the property outright.”

There is also concern that some buy to let landlords could inadvertently break the new rules if one of their tenants loses their job and is forced to claim benefit.

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 linda.wood@investmentsense.co.uk

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

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