UK House Prices up by 6.6% & Mortgage Approvals Show Slight Rise

Halifax research shows an increase of 6.6% in house prices & Bank of England stats show a slight improvement in mortgage approvals. What does this mean?

In its most recent house price survey (7th May 2010) UK mortgage lender, the Halifax, found that house prices in the country had risen by 6.6% over the last year. On the 4th May 2010 the Bank of England announced that March had seen a slight improvement in the number of mortgage approvals. What does this mean for the housing market and for those looking to take out a mortgage?

Are UK House Prices Showing a Consistent Trend Upwards?
According to the Halifax house prices have seen a 6.6% increase in the last year. This doesn’t necessarily mean that the market is on the move again and that there will be a continued upward trend. The statistics here show that price increases have actually slowed down or decreased in recent months even though they have increased overall over the course of the year. The prediction for 2010 is that prices will remain flat.

How Much are Mortgage Approvals Increasing?
Research by business directories shows that the number of mortgage approvals rose in March. This month saw 48,901 approved mortgage deals compared to 46,882 in February. This gives a 17% increase on statistics from March 2009. Although this looks positive, it is still early days. The Bank’s research also indicates that mortgage approvals for Q1 of 2010 were the lowest first quarter results for any year (apart from 2009).

What Do These Increases in House Prices and Mortgage Approvals Mean?
Although there are positives in both sets of research, this doesn’t necessarily mean that things will go back to the way they were before the recession. The recent house price increase, according to Martin Ellis of the Halifax, may be down to the fact that: “New sales instructions have risen, helping to push up the stock of unsold properties in recent months. As a result, the imbalance between supply and demand is easing somewhat.”

Other lenders are also predicting that house prices are likely to remain flat in 2010. This may encourage some buyers to take out a new mortgage/remortgage before prices rise again. But, it may also deter some sellers from listing their homes if they do not feel that they will make a good enough profit.

Despite the rise in mortgage approvals, lenders are still tending to ration mortgages. There has been an increase in the number of loan types offered in recent months with more 5% deposit deals being made available. This may be useful for some first time buyers but lending conditions may still be difficult for some. Those considering taking out a mortgage may want to look at ways of finding low cost deals to get the most cost effective solution.