The UK’s largest mortgage lender, Halifax, has announced that house prices in the country hit a two-year high in August. Prices rose 4.3% compared to the same time last year, meaning the average cost of a UK home is now £292,505. This follows the Bank of England’s recent decision to cut interest rates, the first such cut in four years. That cut has reportedly increased confidence among homebuyers.
The bank has said that house prices are now just under their record high of £293,507, which was reached in June 2016. Amanda Bryden, head of mortgages at Halifax, stated that “while this is welcome news for existing homeowners, affordability remains a significant challenge for many potential buyers still adjusting to higher mortgage costs”. Interest rates currently stand at 5%, their highest level since 2008.
Sarah Coles, head of personal finance at Hargreaves Lansdown, noted that mortgage rates have improved, with two-year fixed rates down from 5.77% to 5.54% as a result of the Bank of England’s move; however, there are still challenges for many buyers.
Halifax’s report includes only buyers with mortgages and does not take into account those who purchase homes through buy-to-let deals or with cash. Cash buyers make up around a third of housing sales. The bank also revealed that Northern Ireland is currently seeing strong house price growth, with prices there having gone up 9.8% on last year. Over the past year, England’s northwest has seen the sharpest rise in prices, with an increase of 4%.
The Bank of England is widely predicted to make another cut to interest rates this year, but has yet to indicate when it will do so. Its next meeting is to be held on 19 September. Halifax expects modest growth in house prices for the rest of 2019; with market activity said to be picking up and more interest rate reductions potentially on the horizon, buyers could continue to be encouraged to close deals
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