HOUSE THAT
House prices rise in July as Bank of England rate changes according to UK’s biggest lender
Keep scrolling to see our interactive map which shows how house prices have changed in your area
HOUSE prices rose by 0.8% in July the UK's biggest lenders, Halifax, has found.
That means the average property is now £2,200 more expensive than the previous month, and now stands at £291,268.
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The rise follows three months of relatively flat house price growth earlier this year, but now there are signs the housing market is picking up.
Annual growth, which compares prices now to the same period last year, was 2.3%, the highest rate of growth since the start of the year.
Halifax added that lower mortgage costs and more interest rate cuts could fuel a rise in house prices for the rest of this year too.
The Bank of England last week reduced the base rate from 5.25% to 5%, which is used by banks and building societies to set the rates it offers on a range of products including mortgages.
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Major lenders are now competing to offer the best rates with several offering sub-4% loans, and more could follow.
While a leap in house prices would be good news for those looking to sell, it could pose a challenge to many cash-strapped first time buyers.
Amanda Bryden, head of mortgages, Halifax, said: “Last week’s Bank of England base rate cut, which follows recent reductions in mortgage rates, is encouraging for those looking to remortgage, purchase a first home or move along the housing ladder.
“However, affordability constraints and the lack of available properties continue to pose challenges for prospective homeowners.
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“Against the backdrop of lower mortgage rates and potential further base rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year.”
What's happening with house prices?
House prices have now shown signs of growth after three almost stagnant months, according to Halifax.
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The property market has remained fairly subdued in 2024 so far, as buyers and home-movers have faced high mortgage rates and the uncertainty of the General Election.
A brief period at the start of the year saw lenders slash mortgage rates in anticipation that the Bank of England would be making cuts to the base rate, which has stood at a 16-year high of 5.25% since August 2023.
But those hopes quickly faded and the rate cut did not materialise until far later in the year, when on August 1 it decided to reduce it by 0.25 percentage points after inflation hit its 2% target.
Holly Tomlinson, financial planner at Quilter said: ";A feeling that rates are going in the right direction though will help many people decide to take the leap back into the market, pushing up demand for homes."
"Those on the fence about selling their home may also feel the time is now right. The autumn may therefore prove to be busier than anticipated."
A string of lenders have now released sub-4% mortgages, though rates still remain far higher than a few years ago. In 2019, the average five year fixed mortgage rate deal was 2.94%.
Different types of mortgages
We break down all you need to know about mortgages and what categories they fall into.
A fixed rate mortgage provides an interest rate that remains the same for an agreed period such as two, five or even 10 years.
Your monthly repayments would remain the same for the whole deal period.
There are a few different types of variable mortgages and, as the name suggests, the rates can change.
A tracker mortgage sets your rate a certain percentage above or below an external benchmark.
This is usually the Bank of England base rate or a bank may have its figure.
If the base rate rises, so will your mortgage but if it drops then your monthly repayments will be reduced.
A standard variable rate (SVR) is a default rate offered by banks. You usually revert to this at the end of a fixed deal term, unless you get a new one.
SVRs are generally higher than other types of mortgage, so if you're on one then you're likely to be paying more than you need to.
Variable rate mortgages often don't have exit fees while a fixed rate could do.
Nationwide was the first, reducing its five-year fixed mortgage to a rate of 3.99% last month.
NatWest has also come out with a competitive five-year fixed mortgage deal, offering 3.97% interest.
HSBC and Barclays have also slashed their rates today.
Buyers face a choice of fixing now or waiting for rates to drop further, Tomlinson added..
She said "Lots of clients in the midst of remortgaging or buying are considering tracker mortgages without early repayment charges, allowing them to benefit from future rate cuts with the option to fix when rates are lower.
"However, many people like the certainty of a fixed-rate deal."
How much have house prices changed?
Northern Ireland recorded the strongest property price growth of any nation or region in the UK, the latest Halifax data shows.
They rose by 5.8% on an annual basis in July, and up from 4.1% the previous month.
The average price of a property in Northern Ireland is now £195,681.
The North West also recorded strong growth, up 4.1%, compared to the previous month, properties here now average £232,489.
Only homes in Eastern England have seen a knock, tumbling by 0.4% in July to £330,282.
Here are average house prices and the annual change, according to Halifax.
Regional annual change figures are based on the most recent three months of approved mortgage transaction data:
- East Midlands, £239,448, 0.6%
- Eastern England, £330,282 minus 0.4%
- London, £536,052, 1.2%
- North East, £171,663, 2.6%
- North West, £232,489, 4.1%
- Northern Ireland, £195,681, 5.8%
- Scotland, £205,264, 2.1%
- South East, £386,468, 1.3%
- South West, £301,359, 1.1%
- Wales, £221,102, 3.4%
- West Midlands, £253,649, 1.8%
- Yorkshire and the Humber, £206,480, 1.8%
Halifax is part of Lloyds Group, which is the UK's biggest mortgage lender.
Its monthly house price index is based on the mortgage data it holds and has been going since 1983.
It's one of several key barometers of the property market.
The official measure of house prices is from the Office for National Statistics, which uses data from the Land Registry where the actual sold price is recorded.
This is the most accurate of all the indices, but the figures come out three months after the homes are sold, so there's a big time lag.
Halifax and Nationwide each publish a monthly index tracking the average prices of homes on which they provide mortgages.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
As it's based on mortgage approvals, it means cash buyers are not included.
Rightmove and Zoopla also publish a monthly house price data.
The former is based on asking prices from the property listings on its website.
The latter uses sold prices, mortgage valuations and data on agreed sales.
Neither take into account price a property actually sold for, like the ONS Land Registry, which could end up being higher or lower and some might not even sell at all.
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Here's the latest data from other indices:
- Nationwide - house prices increased 03% in July, and 2.1% annually, with the average property now at £266,334.
- Land Registry - house prices increased by 1.2% in May and 2.2% annually, with the average property now at £281,000.
- Rightmove - house prices fell 0.4% in July, and increased 0.4% annually, with the average new seller asking price now at £373,493.
- Zoopla - house prices increased 0.1% in July, and by the same annually, with the average house price now £265,600.
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