UK HOUSE PRICE INDEX: June 2016 (released 16 August 2016)

The June 2016 house price index data for the UK showed a monthly rise of 1.0 per cent across England, Wales, Scotland and Northern Ireland, while in England the increase was slightly lower at 0.8 per cent. In London the monthly change was 0.2 per cent but it was the South East region that experienced the highest monthly growth with a rise of 1.5 per cent. The West Midlands and the North East each saw the most significant monthly price fall with a movement of minus 0.2 per cent.  

On an annual basis the price change across the UK was 8.7 per cent, bringing the average house price to £213,927. In England the annual price increase was a little higher at 9.3 per cent and the average house price £229,383. London experienced a rise of 12.6 per cent making the price of an average London home £472,204. However, it was the East of England that saw the greatest increase over the year with a rise of 14.3 per cent, while the North East saw the lowest annual price growth at just 1.5 per cent. In terms of property type, flats and maisonettes once again saw the greatest annual increase in prices both across the UK as a whole at 9.8 per cent and in England at 10.6 per cent.   

Detailed statistics for local authority areas continue to show a wide variation but ten areas saw a fall in prices over the year, notably Hammersmith & Fulham and South Lakeland at minus 3.2 per cent. The highest annual rise was seen in Slough at 24.6 percent, while Stevenage, Croydon, Luton, Newham and Waltham Forest also saw increases of 20 per cent or more.

Sales volumes for England in April 2016 totalled 42,938 compared to 102,597 in March. April sales were also 33.4 per cent down compared to a year ago when 64,467 completed house sales were made.

Statistics relating to building status showed that the average price of a new build property in England in June was £268,703, down 4.6 per cent on May but up 9.2 per cent on a year ago. The average price of a resold property was £227,377, a rise of 1.6 per cent over May and 9.6 per cent higher than 12 months ago.

Statistics on buyer status in England showed that the average price of a house sold to a first time buyer was £192,987 and to a former owner occupier £259,780. Prices to first time buyers increased by 0.6 per cent over May, while re-purchasers saw an increase of one per cent. Over the year, prices for both first time buyers and former owner occupiers increased by 9.3 per cent.

The latest figures on funding status, which compare average cash and mortgage prices, show that in England the average cash price was £215,534 and the average mortgage price was £236,363. The monthly change for cash buyers was an increase of one per cent, while mortgage purchase prices rose by 0.8 per cent. However, the annual change for cash purchases was 8.7 per cent, while for mortgage purchases it was rather higher at 9.6 per cent.

The seven-year itch

Both Coventry Building Society and Barclays Bank have announced the launch of some highly-competitive 7-year fixed rates.

These deals not only offer longer term security for borrowers, but have been priced to match the cost of some of the best 5-year fixed rates currently on the market. 

Deciding how long to fix your mortgage for is not an easy decision, and for some, locking in to a deal for 10 years may seem too long. These new offerings will provide a useful alternative for homeowners.

The recent vote to leave the EU has resulted in a degree of uncertainty, and this combined with falling funding costs could mean that now is the perfect time for borrowers to grab some peace of mind for the medium to long term.

These deals do carry Early Repayment Charges throughout the fixed period, so it’s important to be mindful of any potential changes in circumstances over the next few years.

Fixing for this length of time will not suit everyone, but for some a seven year deal will provide peace of mind for the future, and being able to do so at record-low rates is an added bonus.

Leeds Building Society improves its Buy-to-Let criteria 

Leeds Building Society has introduced a greater degree of flexibility into its criteria, by announcing that it will no longer impose a maximum tenancy period for Buy-to-Let mortgages.

Criteria regarding tenancy agreements has improved throughout the market in recent years. 

Rather than insisting on a maximum of just 6 to 12 months, most lenders now allowing tenancies of 2, and in some case 3 years. 

Very few currently go beyond this however, so the move by Leeds has been welcomed by many.

With people renting for longer, and an increase in the number of families with children living in the rental sector, there is a definite need for more security of tenure. 

Leeds has now opted to accept agreements for a time period which is suitable for both landlord and tenant. 

This will provide more choice for those who would prefer to have a longer agreement in place and offer a greater level of security for both parties.

Fixed or variable?

Falling funding costs and a recent cut in the Bank of England Base Rate means that the choice of mortgage deal is as good as it’s ever been for borrowers.  

Fixed rates are currently at record lows, so now is the perfect time to protect your mortgage payments for the foreseeable future by locking in to one of today’s highly competitive rates. 

With talk of another cut in the base rate later this year, some borrowers will be attracted to variable rates, such as trackers or discounts, and the chance to make savings now. Many of these deals also come with no Early Repayment Charges, so the flexibility on offer can prove useful.

It is worth noting however that, since the base rate cut, some lenders have already increased the margins on their tracker mortgages, and others are likely to follow suit. 

It is also worth checking the small print, as some tracker deals contain a collar, which would prevent it from dropping any further.

The choice of mortgage comes down of course to personal preference, but it’s important to consider how much room you have in your budget to cope with rising payments.

Anyone concerned about the prospect of an increase should look to fix now and take advantage of some rock-bottom rates.

Bank of England cuts base rate

Last week saw the Bank of England cut Base Rate for the first time in over 7 years, to a historic low of just 0.25%.

The move follows months of speculation, and mortgage-holders will now be keen to find out what it means for them financially.

Most borrowers with an existing tracker mortgage linked to the base rate should see the full 0.25% cut passed on to them, and a drop in their monthly payments as a result. 

It is worth checking the small print however, as some lenders have applied a ‘collar’ which would prevent the payable rate from falling below a certain level.

Homeowners currently on a Standard Variable Rate may have to wait a little longer to see what their lender will do, and there are no guarantees that the full cut will be passed on.  

Many will be tempted to wait and see what their lender will do over the coming weeks. Rather than settling for a small drop in their rate however, it makes sense to review the market and find out what other options are available. 

There are much lower rates to be found and the savings will be far more significant.