26th June 2015
The average borrowers is taking out a bigger loan than at any point since the recession to get on to the property ladder.
Although house price growth across and England and Wales dropped in May the number of completed house sales has risen.
According to the latest figures from the Land Registry, the average property price is now £179,696, with prices up 4.6%, the lowest rise in 15 months.
The 4.6% growth is in contrast to the average 10% growth seen this time last year.
Homebuyers are not being put up by an increase in property prices and mortgage approvals have hit their highest point since stricter mortgage affordability rules, known as the Mortgage Market Review, were put in place last year.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: ‘Today’s Land Registry data shows that house prices are continuing to march upwards, with London and the South East seeing the greatest annual growth.
‘The trend is not deterring homebuyers, as mortgage approvals are also at the highest since the Mortgage Market Review was implemented…But it does mean that the average borrower is taking out a bigger loan than at any point since the recession, as well as putting up the largest average deposit for six years.’
Murphy added that cheap mortgages and lender competition are key factors ‘that are sustaining the momentum in the housing market’ but warned ;low rates won’t last forever’.
‘The latest signs from the Bank of England are that there may be less than a year to go before the base rate rises, so the second half of 2015 will be a crucial window to act for anyone considering remortgaging, as well as potential homebuyers,’ he said.
While rising house prices are good news for homeowners, those who are not yet on the property ladder are at risk of never stepping on to it.
‘The risk remains that rising house prices will leave growing numbers of aspiring first time buyers in a position where they will struggle to raise the required deposit,’ said Murphy. ‘It is widely assumed that spending cuts will dominate next month’s emergency Budget, but the government mustn’t forget the need to increase housebuilding and avoid an affordability crisis.’