Recent house price figures are showing a continued increase in property values which is great news for homeowners as higher values mean they can get more extra cash when they remortgage.
In addition to the increasing property prices, mortgage rates have dropped to record-lows giving borrowers more competitive options to choose from when buying or remortgaging.
This situation would quickly change if the Bank of England increases the base rate though. A base rate rise would change the playing field for lenders and borrowers will be immediately affected.
Experts are worried about the people’s ability to adjust to higher mortgage repayments when rates increase.
Recent comments by Bank of England governor Mark Carney suggest a rise in the base rate is not far away, so borrowers should take advantage of the current favourable market situation while it still lasts.
In his analysis of the Land Registry’s latest house price index, Brian Murphy, head of lending at Mortgage Advice Bureau, said:
“The mortgage price war has helped by making loan rates more affordable over the last 12 months, but with the Bank of England edging closer to a base rate rise, it is unlikely that such consumer-friendly rates will be a feature of the market for too much longer.
“Borrowers have gotten used to interest rates and house prices travelling in opposite directions for years and some may have been biding their time to see how low rates will go.
“Now a base rate rise is on the horizon, would-be buyers and re-mortgagers should act fast if they want to get the best deals.”
The latest Land Registry house price index for June 2015 shows:
- House prices increased by 5.4 per cent compared to a year ago and by 1.1 per cent from May 2015.
- The average property value in England and Wales now stands at £181,619 overtaking the previous peak of £180,983 in November 2007.
- The region with the most significant annual price increase is London (+9.2 per cent)
- The North East experienced the greatest monthly rise (+3 per cent)
- Yorkshire & The Humber saw the lowest annual price increase of 1.4 per cent and was also the region with the biggest monthly price drop of 0.9 per cent
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