GOING UP
UK house prices 2.4% higher than last year and rising at fastest rate since 2022
Plus watch our video on how to get the best mortgage
UK HOUSE prices rose annually by 2.4% in August and are now increasing at the fastest rate since December 2022.
This means the typical home is around £6,000 more expensive than what it was this time last year, and stands at £265,375, new figures by Nationwide have found.
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The news follows a rather subdued time for the property market, with wider economic factors such as wage stagnation and the hangover from political uncertainty hitting the market hard.
While the pace at which property prices increase is now at the quickest since December 2022, it still 3.0% below the all-time highs recorded in the summer of 2022.
On a monthly basis house prices actually fell by 0.2% in August, with around £959 wiped off the value of a home compared to July.
However, this tends to happen during the warmer months as factors such as the summer holidays tend to slow down action in the market.
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Stephen Perkins, managing director at Yellow Brick Mortgages said: "Enquiry numbers were steady in August despite the expected drop off due to summer holidays, which overall has seen house prices remain firm resolute.
"Stability is very welcome after the last few years of turmoil."
Meanwhile, Robert Gardner, Nationwide's chief economist, said housing market activity is likely to "strengthen gradually".
"As affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth," he explained.
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In another boost, mortgage approvals for home buyers have jumped to the highest level since Liz Truss' disastrous mini-budget was delivered.
New figures from the Bank of England recorded 62,000 approvals for house purchases in July – the highest total since 65,100 were recorded in September 2022.
Earlier this month a string of the UK's biggest lenders cut interest rates on mortgage deals to below 4%, in a boost for cash strapped buyers.
This was in response to the Bank of England reducing the base rate from 5.25% to 5% after seven months.
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When the base rate is reduced it can often be an indicator that sentiment in the housing market might improve.
This is because banks and building societies use it to set the rate of it interest it charges on products including mortgages.
Alice Haine, personal finance analyst at Bestinvest said: "Another interest rate reduction from the Bank of England sooner rather than later could catalyse the market even further.
"The BoE has stressed, however, that it remains cautious about further cuts following the 25-basis point reduction at the start of this month, as it wants to ensure any lingering cost pressures are stamped out."
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you're remortgaging and your loan-to-value ratio (LTV) has changed, you'll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home's value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you're nearing the end of a fixed deal soon it's worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal - but compare the costs first.
To find the best deal use a to see what's available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You'll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee - sometimes more than £1,000 - to the cost of the mortgage, but be aware that means you'll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you'll have to pass the lender's strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month's payslips, passports and bank statements.
She added: "The good news for borrowers is that mortgage rates are continuing to ease though how much effect this will have on repayments depends on what type of mortgage someone has and when their current deal expires."
"New borrowers and those on trackers are benefitting the most from the improving mortgage landscape, but existing mortgage holders locked into expensive fixed rate deals with some time left to run won’t see any gain at all."
A fixed rate mortgage means your repayments have a fixed interest rate for a period of time.
Therefore you’ll pay off the same amount every month, for the length of your introductory deal, usually for two to five years.
When the fixed rate period ends, your rate will change to the lender's standard variable rate (SVR).
With an SVR mortgage, your mortgage payments could change each month, going up or down depending on the rate.
What is happening to house prices?
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.
As winter approaches there appears to be a more positive sentiment in the market, with prices up 2.4% on an annual basis in August, according to the latest Nationwide figures.
But reports that Chancellor Rachel Reeves could raise inheritance and capital gains tax in the upcoming Autumn Budget could dampen improvements made.
Alice Haine, personal finance analyst at BestInvest added: “Rumours are rife that the Government will stage a Capital Gains Tax raid – potentially aligning CGT rates with income tax – raising fears for buy-to-let landlords and those with second homes about the implications for their property portfolio.
"A dramatic shift in CGT rates could trigger a selling frenzy with a flood of new listings on the market if homeowners rush to sell before any new legislation comes into force though of course there is also the risk that a new regime takes effect immediately."
How much have house prices changed?
Both 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.
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.
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Here is the latest figures on house prices from other indices
- Halifax- house prices increased by 0.8% in July, typical property now costs £291,268.
- Land Registry - house prices increased by 2.7%in Jube on an annual basis and 0.5% month on month. The average property price was £288k.
- Rightmove - Average new seller asking prices fell 1.5% in August this month to £367,785.
- Zoopla - house prices increased 0.5% in July , with the average house price now £266,400.
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