September’s Nationwide House Price Index report shows that London has become the weakest performing region in the UK for first time since 2005, with house prices down 0.6% year-on-year. However, nationally, annual house price growth stable at 2.0% in September.
The lenders’ chief economist, Robert Garder, said of this month’s data; “The annual rate of house price growth remained broadly stable in September at 2.0%, compared with 2.1% in August.
Housing market activity, as measured by the number of housing transactions and mortgage approvals, has strengthened a little in recent months, though remains relatively subdued by historic standards.
Low mortgage rates and healthy rates of employment growth are providing some support for demand, but this is being partly offset by pressure on household incomes, which appear to be weighing on confidence. The lack of homes on the market is providing ongoing support to prices.
House price growth rates across the UK have converged in recent quarters. Annual growth rates in the south of England have moderated towards those prevailing in the rest of the country. London has seen a particularly marked slowdown, with prices falling in annual terms for the first time in eight years, albeit by a modest 0.6%. Consequently, London was the weakest performing region for the first time since 2005.
At its September meeting, the Bank of England’s Monetary Policy Committee (MPC) signalled that, if the economy evolves broadly in line with its expectations, an interest rate increase is likely in the months ahead. This would be the first increase in the Bank Rate since July 2007.
Providing the economy does not weaken further, the impact of a small rise in interest rates on UK households is likely to be modest. This is partly because the proportion of
borrowers directly impacted will be smaller than in the past. In recent years the vast majority of new mortgages have been extended on fixed interest rates.
With a degree of uncertainty creeping into the London house price market, and with interest rate rises back on the Bank of England’s radar once more, now may be the perfect time to assess your medium-long term mortgage situation.
Here at The Financial Planning Group, we pride ourselves on being to offer our clients mortgage products from the whole market, which opens up so many more options and offers – we have more than 24 years experience in helping families find the perfect low-rate deals and ensuring that the financial side of moving home is as stress free as possible.
If you would like to speak about your mortgage or re-mortgage, and secure one of the record low deals that are currently available, please feel call Steve Padgham on 020 8614 4782 or email Steve.Padgham@fpgonline.co.uk