Housing market update
Halifax reported a slight fall in house prices for May although the upwards pressure on prices remains as reported recently by Nationwide.
Prices have risen despite a subdued level of mortgage lending which has been constrained by the introduction of the Mortgage Market review in April 2014.
Cash transactions within the market remain relatively high. Nationwide reported; – “the significant rise in the share of cash transactions occurred in the wake of the financial crisis, where a tightening in credit conditions and a deterioration in the labour market limited the number of people able to buy with a mortgage”. We are now seeing these cash buyers being joined by an increased number of mortgage-dependent buyers.
Data released by the Bank of England has shown mortgage rates are continuing to fall with the average quoted interest rate on a 90% LTV 2-year fixed loan dropping to 3.52% in May. Low interest rates are helping to keep mortgage arrears at a low level.
We expect to see a continued upward trend on house prices although we do not expect this to be significant. The level of stock within the marketplace remains relatively low and tougher mortgage regulations remain applicable.