House prices rose by 1.1 per cent in January, according to the Halifax.
Commenting on the data, Bien Media client Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘The housing market has started 2014 where 2013 left off. Confidence among buyers is high with regards to their ability to get mortgage finance and their belief that house prices will continue to rise so they need to move sooner rather than later. Subsequently, estate agents and mortgage brokers have got off to an incredibly busy start as many buyers view this as the year when they will finally get on the housing ladder, or move up it – as long as they can find the right property.
‘Falling unemployment has also raised concerns that interest rates will rise sooner rather than later. Swap rates have eased off slightly but a handful of lenders – Santander, NatWest and Nationwide – have raised their five-year fixed rates regardless so it looks as though pricing on such products has bottomed out.
‘However, there is no need to panic. It is still highly unlikely that interest rates will rise in 2014, despite unemployment falling faster than predicted and the economy recovering at a quicker rate. We are still very much in recovery mode and it’s unlikely that the Bank of England will risk raising interest rates too soon. Borrowers need to plan ahead, however, and ensure they can cope with rate rises when they do come.
‘Lenders are keen to have a strong first quarter and continue to offer some extremely attractive mortgage rates. With the Mortgage Market Review set to be introduced at the end of April, this will likely lead to a slowdown in lending as lenders get to grip with the changes they need to introduce. Lenders are therefore trying to get ahead of the game so now is a good time to secure a competitive deal.’
Also commenting, Nicholas Ayre, managing director of homebuying agency Home Fusion, said: ‘With house price growth at 7.3 per cent buyers are considerably more optimistic than they were this time last year. Many are still concerned about the ‘bogy’ of an interest rate rise, although that is a tough call to tell when Mark Carney, governor of the Bank of England, will make his move. The same upward pressure on house prices is being felt, as supply constraints don’t appear to be ending anytime soon.
‘We have broken through the one million transaction threshold for the first time since 2007, which we always see as the darkest days and has come to represent our reference point when everything went horribly wrong. We are moving way beyond that now. We have reached a point at which buyers are now thinking very hard about taking the plunge and this may now be starting to temper demand. The spectre of overpaying and the thought of negative equity could well be in the back of people’s minds.
‘The definition of a house price bubble, is when people will pay anything for a property. This is not what we are seeing here. Many people are still heavily indebted, particularly if they have maxed out on credit cards. Growth at 1.9 per cent over the previous three months and annual price growth falling slightly when compared with the previous month, is hardly a market running away with itself.’