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Market Still Strong According to Halifax

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Demand is still strong in the housing market according to the latest round of figures released by the Halifax.  The monthly rise in house prices was exceptionally large at 3.9% but the 12-monthly figure, up to the end of May, was more realistic – quoted at 8.7%, which was a small rise on the previous month’s figure of 8.5%.  According to the bank, the average UK house price now stands at £184,464.  This is the highest it has been since October 2007.


A few days earlier, the other big mortgage lender, Nationwide, had stated that price rises were starting to moderate, but that house prices were now at their highest since their records began in 1991.  Fears of a house price bubble have already prompted lenders to try and subdue the market by introducing lending multiples on some of the more high-risk loans.  Halifax is owned by Lloyds Banking Group, and they, together with Royal Bank of Scotland, have already restricted those buying a property worth £500,000 and over, to loans of four times the buyers income.


It is thought that the Bank of England is also about to introduce income multiple caps on mortgages in order to cool the market.  In 2013, around 900,000 mortgages were issued; of these, around a quarter were to house buyers who were borrowing more than three times their income.  It is feared that any new restrictive legislation on income multiples could create hundreds of thousands of so-called ‘mortgage prisoners’ – i.e. those who would not be able to afford to remortgage.


However, this mortgage trap could be avoided for some who have high loan-to-value mortgages.  It is thought that the regulator could apply some common sense in the case of those with good repayment history.


Sources: bbc.co.uk, lloydsbankinggroup.com, thisismoney.co.uk (image courtesy of dailymail.co.uk)

ourtesy of theinformationdaily.com)