London (Parliament Politics Magazine) – UK house prices raised by 0.8% in July, and lower mortgage rates are predicted to lead to continued expansion throughout the rest of the year, according to the mortgage lender Halifax.
The average house cost in the UK across July was £291,268, a 0.8% incline on the £289,042 recorded in June. It marks a substantial uptick after three subdued months, during which there were peaks of between 0.1% and 0.2%. The annual increase rate increased to 2.3%, the most elevated since January this year.
How Have Lower Mortgage Rates Affected the Housing Market?
Amanda Bryden, the director of mortgages at Halifax, stated that last week’s Bank of England base rate cut and the recent decline rates in mortgages from the main providers were pressing for those hoping to purchase new homes or move up the housing ladder. She said: “Against the backdrop of lower mortgage rates and potential further base rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year.”
Last week the Bank lowered interest rates from 5.25% to 5%, the first cut in four and a half years. However, it expressed savers should not expect more large cuts in the future months as it attempts to ensure the rate of inflation does not return to the elevated levels seen over the last two years. Many big banks have been trimming their mortgage rates in recent weeks.
Last week lenders such as Halifax, NatWest and Santander slashed interest rates by up to 0.20 percentage points. Nationwide, the UK’s largest lender has also begun delivering a sub-4% deal for some new buyers.
How Are Mortgage Rate Cuts Influencing Buyer Behavior?
Sam Mitchell, the chief executive of Purplebricks, stated: “The growing confidence we’ve seen take hold of the housing market in recent weeks has been supercharged by the BoE’s interest rate cut. “With lenders already slashing mortgage rates in response to last week’s decision, buyers are beginning to move ahead with purchasing decisions they have been putting off for months.”
London persists in having the most costly properties, with the average property in the capital commanding £536,052, up 1.2% on last year’s figure. Northern Ireland underwent the biggest rise in costs, with the average cost of a home increasing 5.8% to £195,681 in July. The second biggest growth came in the north-west of England, with costs increasing by 4.1% across the month, to £232,489.
Amy Reynolds, the head of sales at the estate agency Antony Roberts in Richmond, London, stated: “With an unexpectedly busy beginning to August in our offices, the long-awaited cut in interest rates and reduction of any election uncertainty has gone down very well with prospective buyers and sellers. “However, buyers ought to be careful what they wish for as cheaper mortgages will almost definitely mean higher asking prices. If we see a flurry of new applicants coming back to the market, inspired by cheaper mortgage rates, then these higher prices are likely to be achieved.”