House Prices Continue To Rise | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 01/09/2021

During August house prices increased by 2.1% month-on-month, despite experts believing that the housing market would begin to slow as the stamp duty holiday comes to an end, the latest Nationwide House Price Index found.

The average house price in the UK now stands at £248,857 after August saw the second largest month-on-month increase in 15 years. Commenting on the figures Robert Gardner, chief economist at Nationwide, said: “Annual house price growth increased to 11% in August, from 10.5% in July. Prices rose 2.1% in month-on-month terms, after taking account of seasonal effects. House prices are now around 13% higher than when the pandemic began.

“The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market. Moreover, the monthly price increase was substantial – at 2.1%, it was the second largest monthly gain in 15 years (after the 2.3% monthly rise recorded in April this year).

“The strength may reflect strong demand from those buying a property priced between £125,000 and £250,000 who are looking to take advantage of the stamp duty relief in place until the end of September, though the maximum savings are substantially lower (£2,500 compared to a maximum saving of £15,000 on a property valued at £500,000 before the stamp duty relief in England tapered).

“Lack of supply is also likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books.”

What does the rise in house prices mean for mortgage borrowers?

Although experts believe that the housing market will start to slow over the next few months as the stamp duty holiday ends this month, low mortgage rates and lack of supply could see house prices continue to rise. For first-time buyers hoping that a fall in house prices will help them get onto the property ladder this may come as a disappointment, but the good news for first-time buyers is that mortgage deals for those with a 10% and 5% deposit have made a recovery in recent months and there are now rates from as low at 1.99% in the two year fixed first-time buyer charts.

Homeowners looking to remortgage the increase in house prices will help to improve the equity they own in their home, which could see them take advantage of some of the most competitive remortgage rates currently available in the chart. For example, the majority of sub-1% remortgage deals are only available to those remortgaging who have 40% equity in their home. Saying this, homeowners should be aware that mortgage lenders will carryout their own valuation of the property and they may value the home lower than the market value. In fact, recent analysis from estate agents Benham & Reeves found that an estimated 390,285 homes had been down valued by surveyors working on behalf of lenders over the last 12 months.

Overall, however, the rising house prices are likely to benefit homeowners looking to remortgage. Saying this, mortgage borrowers - whether first-time buyers, home-movers or those remortgaging – should be aware that although the mortgage market is competitive at the moment deals are being withdrawn rapidly as our research, which was published in the August Moneyfacts UK Mortgage Trends Treasury Report, found that the shelf life for mortgage deals was just 21 days, which is equal to the lowest recorded. Eleanor Williams, finance expert at Moneyfacts.co.uk explained, “August has seen the average shelf life for a mortgage product reduce by 9 days to just 21 days, last seen in May 2017 and the joint lowest we have recorded. Borrowers considering their mortgage options may therefore find that products have a limited period when they are available, and so having the up-to-date market knowledge of a qualified adviser could be invaluable in ensuring they can secure their chosen product in time.”

How to get the best mortgage deal

Speaking to a mortgage broker will help you to get the best deal for your personal requirements, as they will not only be able to see deals not available directly to consumers but will also be able to advise you about which deals suit your specific situation and needs. You can speak to a mortgage broker for free by using our preferred brokers Mortgage Advice Bureau - for more information click here

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