Paula John: Market news
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Nervousness about the economy and the housing market has prompted an increasing proportion of borrowers to opt for fixed-rate deals. Figures from the Council of Mortgage Lenders reveal that 59 per cent of all loans taken out in April were on a fixed-rate basis, up from 54 per cent in March. And anyone considering a fix right now should act quickly. While the average fixed rate paid by a borrower with a 25 per cent deposit last month was 6.27 per cent, experts warn that two-year deals could soon exceed 7 per cent as prices are set to rise on the money markets where lenders get their fixed-rate funds.
GOING DOWN...
The number of new homes built in the UK this year will plummet to around 100,000. This is 70,000 fewer than last year and the lowest annual figure since 1945. This will put paid to Gordon Brown's plans for a boost in housebuilding – he had promised 240,000 new homes a year in order to meet the target needed to accommodate the 3 million new households expected by 2018. The Government last week urged housebuilders to take a long-term view, but with dwindling short-term demand for new homes, firms are cutting back drastically to protect their margins.
GO FIGURE... 0.7%
Could it be true? Some good news about the housing market appeared to emerge last week: the house price index produced by the Department for Communities and Local Government claimed average property values inched up 0.7 per cent in April – a 4.9 per cent increase over a year. This contradicts the longer-standing indices from Nationwide and Halifax, both of which showed decreases that month (by 1.1 per cent and 1.3 per cent respectively). The DCLG index takes the most time to compile, so the figures lag behind both other indices, which showed more dramatic price falls in May. Maybe not such great news after all.
Paula John is editor-in-chief of Your Mortgage
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