House Prices up 1.4%. Next Steppers have good options

A Happy New Year to you all!  I hope you are holding up in the blustery and rather wet conditions!

UK House prices increased 1.4% in December according to the Nationwide House Price index.  This was some 8.4% higher than in December 2012.  The index also suggests that house prices are just 5% below the peak of 2007.  However I would think the impact of the horrendous weather recently will alter the figures somewhat in January/February.  Supply and demand is still playing a major factor with housing transactions being around 25% below 2007/8 levels, but new homes being built are around 45% lower (as at Q3, 2013).

The hope for 2014 rests a lot on the opportunities and offerings that are available to First Time Buyers.  We’re seeing a number of lenders offer mortgages to those with a 5 or 10% deposit.  I expect we will see more as the year unfolds.  Competition is good and should bring rates down at this borrowing level.

However, the ‘next step’ home movers also need attractive propositions in order to move.  There are only a handful of lenders who may consider 5% deposits to those already on the property ladder.  I would hope this offering will increase in order to help the supply chain with properties being available.  If rates remain high in this sector, there will be limited properties available to First Timers, and this will have a knock on effect.

All the while First Timers have limited options, the Buy to Let rental market will continue to flourish and this is one of the most competitive parts of the mortgage market currently.  Many options are available including innovative capital raising options to assist with the purchase of further properties.  Do be advised that market pundits are predicting that whilst house prices will rise, rental values may not, depending on the area.

Finally, the Funding for Lending scheme is coming to an end and this may possibly push up rates throughout the year.  Options are still incredibly attractive at the present time.  Long term fixed rates are sub 3% depending upon loan to value levels and for remortgages many lenders will pay the standard legal and valuation fees.   This, along with news that one in 11 people in Britain fear they won't be able to afford their mortgage or rent at the end of this month, according to research by homeless charity Shelter and YouGov, should mean that the one firm New Years Resolution is to keep on top of ALL finances.   It’s good to talk and most intermediaries will offer free mortgage advice, so don’t hang around and review your options today…