Mortgage And UK Housing Markets Experience Fluctuations

Mortgage lenders and property agencies have just released their latest figures for the UK housing market displaying some conflicting results but the overall mood from analysts appears to be one of optimism for improvements in housing market activity.

Property prices are on the rise again according to the latest survey by the Rightmove property agency website. They reported the largest average monthly house prices rise in two years during February to leave the average residential house asking price in England and Wales at 201,600.

In their report, Rightmove put the record asking prices down to a shortage of sellers and increasing demand, especially a return of buyers at the lower end of the market which should have a knock on effect further up the property ladder.

However Miles Shipside, Rightmove’s commercial director, sounded a note of caution, “Sellers must not get too ambitious or the recovery could run out of steam as affordability is over-stretched again”.

The Rightmove findings seems to stand in contrast to the figures recently released in the FT House price index, which shows that the, “recovery of house prices since the Autumn has been extremely muted and did not gather pace at the start of 2006”. The FT also reported that two other separate sets of secured loans data published about the same time, “showed mortgage lending for January was down on the previous month but higher than the figure for January a year ago.”

The FT house price index shows a subdued market rather than the more buoyant figures from Rightmove, or the lenders, the Halifax and the Nationwide. The FT believes that their figures based on Land Registry data provide an accurate representation of the market, with the figures from the lenders’ bouncing around, “in ways most unlikely to reflect reality.”

Many of those who are currently seeing a restrained increase in the market figures are looking towards possible future Government action through the Bank of England to increase sales. Howard Archer, the chief UK economist at financial analyst Global Insight, feels that an interest rate cut is on the cards in the early part of 2006. Mortgage comparison site Moneynet believes that a widely expected Bank of England base interest rate cut will lead to the housing market, “getting a shot in the arm with many people looking for the right mortgage package to get them on the housing ladder.”

Independent mortgage adviser from John Charcol, Ray Boulger, feels that an interest rate cut which will help the housing market is on the cards. “I expect to see at least two quarter point reductions in base rate this year and house prices to rise by about 5.5 per cent.”

The Council of Mortgage Lenders most recent figures indicate mixed results with gross mortgage lending in January up by 32% to 23bn compared with the 17.4bn recorded in January 2005, however this was down from December’s high of 26.9bn.

Although the recent reports appear to show contradictory and inconclusive results, Howard Archer commented that, “Although the British Banking Association showed some slowdown underlying mortgage lending in January, this followed a particularly strong performance in December. Overall the data indicate the marked improvement in housing market activity – borne out by the latest report from Rightmove.”


All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.

You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.

Useful resources:

Financial Times house price index –

Moneynet mortgage comparisons –

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