Average UK house prices increased by £27,000 last year to £275,000, according to the Office for National Statistics (ONS). A 10.8 per cent increase over the year to December. It wasn’t just house prices that rose; the ONS also reveals that UK rental prices accelerated at their fastest pace since 2017 with increases across every region, including London.
Lack of supply of new homes, coupled with buyers looking for more space. Both inside and out, continues to prop up house prices. The stamp duty holiday which was in place for much of last year also tempted many people to buy. But while this has now ended, motivated buyers who didn’t move last year remain keen to make a purchase.
Low Mortgage ratesLow mortgage rates, despite back-to-back base rate increases at the last two Monetary Policy Committee meetings, have also helped support prices. But with inflation rising to a 30-year high of 5.5 per cent in January, well above the Bank’s 2 per cent target. Further rate rises look to be almost a certainty. Which could have an impact on affordability, and put the brakes on rising house prices.
Borrowers needn’t panic about rising mortgage rates as they are starting from low levels and with lenders awash with cash. Those who want to attract borrowers will need to continue competing on rates. But you may wish to consider fixing your mortgage. If you haven’t already, as this will protect you from further rate rises. Rates can be booked for three to six months before you need them, depending on the lender, so it’s worth planning ahead.
A whole-of-market broker such as AWS Private Finance will be able to advise as to the best deal for your circumstances. Get in touch for more information.