house prices
The Bank of England has confirmed it will scrap rules limiting how much people can borrow when they take out a mortgage. From 1 August, the removal of the rules will mean borrowers can potentially take out bigger mortgages – useful in a time of rising house prices.

Of course, it won’t be a free-for-all. Lenders have learnt their lessons from the financial crisis and will still have their own stress tests in place. Loan-to-income ratios will also remain with a limit on the number of mortgages lenders can offer at more than 4.5 times a borrower’s salary.

Soaring inflation and house prices

With inflation hitting a 40-year high of 9.1 per cent in May, it seems inevitable that another interest rate rise will be on the cards at the Bank’s next meeting in August. Yet despite the escalating cost-of-living crisis, house prices continue to rise.

Average values jumped in April, up from 9.7 per cent in March, according to the Office for National Statistics (ONS). This was the highest rate of growth in at least 16 years if you discount June 2021 when buyers rushed to take advantage of the stamp duty holiday. With the average house price at £281,000 in April, this is £31,000 higher than the same month last year.

The ONS figures conceal regional differences, of course, with Wales and Scotland seeing house-price growth of 16.2 per cent while the rate in England was 11.9 per cent. The southwest saw the fastest price growth in the country at 14.1 per cent while London saw the slowest growth at 7.4 per cent. That said, London property prices still remain beyond the reach of many, particularly first-time buyers.

Protecting against rate rises

The Bank of England has raised interest rates five times in as many meetings of the Monetary Policy Committee but even so, it looks as though they will need to go higher again to try and rein in inflation.

Borrowers are rushing to secure fixed-rate mortgages before the best deals disappear as this will ensure they are protected from any further rate rises. Mortgage deals can be booked up to six months before you need them so with pricing only likely to increase, booking a rate now will give you peace of mind.

The best way to find a new mortgage deal is to seek advice from a whole-of-market broker such as AWS Private Finance. We look at all the products on the market to find the right one for your particular circumstances. If you are looking for a contractor or professional mortgage, we have plenty of experience in arranging such deals, knowing which lenders offer the most favorable terms. Get in touch for more information.