A prediction by Halifax has forecasted that lower mortgage costs and further interest rate cuts could result in a rise in house prices throughout the duration of this year. This projection comes after a few months of flat property prices, with house prices increasing slightly during the month of July. The popular mortgage lender praised recent mortgage rate drops as being “encouraging” for first-time buyers, those refinancing, and those moving up the property ladder. However, it was indicated that affordability challenges combined with a lack of available properties would, in turn, continue to pose problems for potential buyers.
Halifax’s head of mortgages, Amanda Bryden, stated that: “Against the backdrop of lower mortgage rates and potential further [Bank of England] base rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year.” The Bank of England recently lowered interest rates to 0.5% – the first cut ever since the start of the pandemic in March 2020. However, the Bank’s governor has advised that individuals should not expect to see a rush of further reductions.
The Bank’s rate is responsible for determining the cost of borrowing as set by high-street banks and money lenders, therefore, mortgages and credit cards have been impacted by the change. Higher rates over the course of the past two and a half years have put a certain level of pressure onto household finances, although savers have actually seen improved returns.
While mortgage rates have seen a fall, they still sit significantly higher in comparison to rates from a few years ago. This causes homeowners refinancing or those looking to purchase their first home to face increased costs. As an example, the average two-year fixed mortgage was noted to be 5.74%, while the typical five-year deal was disclosed to be 5.36%.
Halifax has shared that a typical property in the UK cost £291,268 in July, an increase of £2,200 in comparison to the previous month, following three months of being relatively flat. In the year leading to last month, annual house price growth was 2.3%, the highest rate since the commencement of this year. The mortgage lender has noted that Northern Ireland has continued to record the highest house price growth – 5.8% – and is ahead of all the other nations and regions across the UK. The only region to suffer a fall in house prices was noted as being eastern England
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