mortgage-sense.net

House prices jumped by more than £2,500 in January despite the shock bank rate rise.

The latest house price report, released last week by Halifax, revealed a 1.3% increase in the cost of a home last month to £188,623.

compared to a year ago, the average house is now 9.9% more expensive.

But despite the strong increase, Halifax said that signs had emerged that the property market was slowing, including reports from the Bank of England of a fall in the number of mortgage approvals and the Royal Institution reporting that new buyer enquiries declined from November to December.

Halifax added that the 1.3% rise in January followed a 1% drop in December, which supported evidence that rampant house price growth could wane.

Martin Ellis, chief economist at Halifax, said: “The mixed pattern of monthly price rises and falls in December and January is consistent with a slowing market.

Negative real average earnings growth for only the second time in over ten years, combined with higher interest rates and slower economic growth will squeeze householders’ finances, causing potential homebuyers to be more cautious and constraining housing demand.”

It has been said by some industry commentators that the strong house price growth seen over the past year could grind to a halt over the coming months, as affordability pressures bite first-time buyers and homemovers.

Howard Archer, chief economist at analysts Global Insight, said: ‘Even before January’s shock interest rate hike, first time buyers were finding it ever more difficult and costly to break into the housing market, while a growing number of people were missing mortgage payments. There were also signs that many people were finding it harder to move up the property ladder.

Whilst the Bank of England decided in February not to raise the base rate any further, there are plenty of commentators speculating that further rises are likely, and if these are to be believed then now is the time to nail down a fixed or capped rate deal. If you have expensive unsecured credit and are concerned about it becoming unaffordable with future rate rises then consider consolidating it at a lower rate to keep your outgoings at an affordable level. If you already have a mortgage at a good rate that you don’t want to interfere with, a great alternative solution is to use the equity in your home to reduce the cost of your unsecured debts by consolidating them into a low rate secured loan - there are plenty of fixed rate deals to be benefitted from to reduce your repayments now and keep them low no matter what the MPC decide to do with the base rate in the future. To find out what savings you could make request a personalised loan quotation from The Loan Helper, with hundreds of deals to choose between from a panel of the UK’s biggest lenders they guarantee to get you the best deal possible. Your personalised loan quotation is free and with no obligation so request one today.