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Low interest rates peg house prices
THE continuing low level of interest rates has led to little movement in house prices for eight months, despite a 0.6 per cent increase last month, lender Halifax said today.
Despite the month-on-month increase in January, average house prices were still 0.9 per cent lower over a rolling three-month period as the Bank of England held interest rates at a record low of 0.5 per cent, supporting demand for housing. The average price of a house in January was £160,907.
The rates have seen mortgage payments fall to their lowest level as a proportion of household earnings for a new borrower for 14 years, Halifax added.
Looking ahead, Martin Ellis, housing economist at Halifax, said: “If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012.”
Prospects for house prices over the coming months will depend on events in the Eurozone and the repercussions of developments there for the UK economy, Halifax added.
The figures come as the industry-wide number of mortgages approved to finance house purchase - a leading indicator of completed house sales - held steady at close to 53,000 for the third successive month in December.
Overall, approvals in the final three months of 2011 were 3 per cent higher than in the previous quarter and 16 per cent higher than in the same period of 2010, according to the Bank of England.
Housing demand may have been helped by a slight improvement in the number of people in employment in the three months to November, which was 18,000 higher than in the preceding three months.
Elsewhere, Halifax said typical mortgage payments for a new borrower - both first-time buyers and home-movers - at the long-term average loan to value ratio stood at 27 per cent of disposable earnings in the fourth quarter of 2011. This was well below the average of 37 per cent recorded over the past 27 years.
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Wednesday 23 May 2012
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