Lower mortgage prices and extra curiosity rate cuts could fuel an increase in house costs for the remainder of this 12 months, Halifax has stated.
The mortgage lender’s prediction got here after property costs ticked up in July following a flat few months.
Halifax stated latest mortgage rate drops had been “encouraging” for first-time consumers, these transferring alongside the housing ladder or these refinancing.
But it warned affordability challenges and lack of obtainable properties nonetheless posed issues for consumers.
“Against the backdrop of decrease mortgage charges and potential additional [Bank of England] base rate reductions, we anticipate house costs to proceed a modest upward development all through the rest of this 12 months,” Amanda Bryden, head of mortgages at Halifax stated.
Last week the Bank of England lowered rates of interest to five% – the primary minimize for the reason that begin of the pandemic in March 2020, however its governor warned not to expect a flurry of further reductions.
The Bank’s rate dictates the price of borrowing set by High Street banks and cash lenders for the likes of mortgages and bank cards.
Higher charges during the last two and a half years have put strain on family funds, though returns for savers have improved.
While mortgage charges have fallen, offers nonetheless stay a lot increased than just a few years in the past, which means owners refinancing or first-time consumers are dealing with elevated prices.
On Wednesday, the common two-year fastened mortgage was 5.74%, whereas the standard five-year deal was 5.36%.
The UK’s largest lender stated a typical property price £291,268 in July, up greater than £2,200 in comparison with the earlier month, “following three comparatively flat months”.
Ms Bryden stated annual house price progress within the 12 months to final month was 2.3%, the very best rate for the reason that begin of this 12 months.
Halifax stated the Northern Ireland continued to document the very best house price progress final month – 5.8% – in contrast with any or nation or area within the UK.
The solely area to document a fall was jap England.
Holly Tomlinson, monetary planner at wealth administration firm Quilter, stated the housing market could “begin to warmth up” after the Bank of England minimize charges for the primary time in additional than 4 years.
She stated whereas the minimize would have a minor affect on repayments for variable and tracker mortgages, and no change for fixed-rate offers, the “change in charges does quite a bit for purchaser and vendor confidence”.
“A sense that charges are moving into the best route although will assist many individuals resolve to take the leap again into the market, pushing up demand for properties,” she stated.
Ms Tomlinson added these “on the fence about promoting” their house may additionally resolve to go forward.
But, whereas house costs rising was “excellent news” for owners, she stated it made it tougher for first-time consumers to get on the property ladder.
Financial buyers are betting the Bank is extra more likely to minimize rates of interest in November, quite than at its subsequent assembly in September.
Halifax, one of many greatest mortgage lenders within the UK, bases its figures on house costs by itself lending and its statistics don’t embrace consumers who buy properties with money, or buy-to-let offers.
Cash consumers account for a couple of third of housing gross sales.
