The latest index from Halifax House prices showed house prices increased by 7.3% in the year to September, the steepest annual increase since June 2016. The average UK property price reached £249,870, as mortgage applications were at a 12-year high.
Month-on-month house price growth was 1.6%, which was unchanged from August.
Halifax said: “September saw a third consecutive month of substantial gains. The annual rate of change will naturally draw attention. Context is important with the annual comparison, as September 2019 saw political uncertainty weigh on the market”.
Moneyfacts report that average mortgage rates have risen for a third consecutive month and the number of available products has fallen.
The average two-year fixed-rate mortgage for all LTVs rose by 0.14% while the equivalent five-year fixed-rate increased by 0.13%.
The average rate is now 2.38% for two-year fixes and 2.62% for their five-year equivalents. However, these are still lower than the rates offered in March this year.
Moneyfacts said: “This increase in rates is likely in part due to the proportion of a rate that a provider needs to attribute to the risk of default, which may be a concern as a result of the economic outlook remaining so unclear. For example, the spectre of negative equity should house prices drop from their current levels is one that responsible lenders will be keen to mitigate yet have no control over.
Similarly, uncertainty around future employment levels and income as government support schemes begin to unwind is another factor lenders may be considering.”
Meanwhile, product availability has continued to decline for the fourth consecutive month to 2,259, the lowest figure recorded by Moneyfacts since May 2010, when 2,087 deals were available. This represented a 54% contraction in the market compared with October 2019, when there were 4,955 products available.
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