House price rise at fastest pace for more than 2 years

A mortgage glut and an extra half a million people in work are pushing up house prices at the fastest annual pace for more than two years, lender Halifax said today.

Despite a more modest 0.5 per cent rise in February, average prices in the past three months are 1.9 per cent ahead of a year earlier — the best performance since September 2010.

The improvement comes as the Bank of England’s Funding for Lending scheme, which helps borrowers by giving lenders access to cheap finance, dramatically cuts the cost of loans. Lenders are offering some of their cheapest-ever rates with Chelsea Building Society today launching a two-year fixed loan at 1.74 per cent for those with a 40 per cent deposit.

Halifax housing economist Martin Ellis said: “The more than half a million increase in the number of people in employment over the past year is likely to have been a factor supporting housing demand.” But other analysts were sceptical of sustained improvements. Moodys Analytics’ Melanie Bowler said “lingering weak economic conditions” would constrain prices.