UK house prices accelerated in March, as lending hit nine-year high

BBC News – By Brian Milligan

http://www.bbc.co.uk/news/business-36310827

House price inflation across the UK jumped to 9% in March, as landlords rushed to beat stamp duty changes, official figures show.

The Office for National Statistics (ONS) said the figure was up from 7.6% in the year to February.

Separate figures showed the amount of money borrowed for home loans in March was the highest for nearly nine years.

The Council of Mortgage Lenders (CML) said £13.8bn was lent during the month, 59% more than in February.

The figure was the highest for any month since August 2007.

Landlords and buyers of second homes have had to pay an extra 3% in stamp duty since the start of April.

“While the increases are substantial, these supercharged levels of activity are likely to be temporary, and will fall back over the summer months,” said Paul Smee, the director general of the CML.

Landlords borrowed £7.1bn in March, an 87% increase on February.

Wages

The ONS figures show that UK house prices have increased five times faster than wages since 2011, according to the Resolution Foundation, which campaigns to improve living standards.

Its analysis of the ONS data shows that house prices have increased by 36% over the past five years.

Average weekly earnings have gone up by just 7% over the same period, it said.

The think-tank said the growth gap between wages and house prices was even more pronounced in London and the South East.

But even in Scotland and the North, house prices have risen at twice the rate of wages.

However the ONS data shows that prices in Scotland fell by 6.1% in the year to March 2016.

Recent surveys by both the Halifax and Nationwide have suggested that house price growth has already cooled since the stamp duty changes came into effect.

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The ONS said house price growth in March was particularly driven by London, where the cost of a house or flat rose by 13% over the year.

In its last survey using the current methodology, the ONS said the average cost of a home in the UK reached £292,000 in March.

Best fixed-rate mortgages: two, three, five, and 10 years

The Telegraph – By James Connington

http://www.telegraph.co.uk/personal-banking/mortgages/best-fixed-rate-mortgages-two-three-five-and-10-years/

Fixed mortgage rates look set to stay low for the year, as expectations of a rise in Bank Rate have been set back significantly.

This February the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to keep Bank Rate on hold at 0.5pc, as the Bank cut its UK growth, inflation and wage rise forecasts.

Rates on two, five and 10-year fixed deals have fallen again following a surge in late 2015, when Mark Carney, Governor of the Bank of England made comments suggesting a rate rise was imminent.

However, expectations for a rate rise have slipped, with market indicators suggesting Bank Rate may not rise until 2018.

Warnings in late 2015 that rising wholesale rates (swap rates) would lead to mortgage cost increases were disrupted by gloomy economic data from around the world, which sent wholesale rates tumbling in early this year.

• Mortgage boom as interest rates fall to record lows

• If rates stay low, would I profit from a ‘tracker’ mortgage?

As a result, mortgage rates have remained low and banks are continuing to aggressively compete for business with cheap deals.

This guide tells you everything you need to know about fixed-rate mortgages and the best deals available. It is regularly updated as events change.

For up-to-date best-buy fixed-rate mortgage deals, go to our mortgage best buy tables. This shows a selection of top rates based around your requirements.

Fixed Rates and Remortgaging

False Dawn?

With the prospect of base rate increases seemingly drawing nearer, fixed rate mortgages should help many households avoid the immediate pain (assuming that any increases are passed through to mortgage rates). Most new mortgages in the UK (88% by number and 81% by value) have a fixed rate period and this has raised the proportion of outstanding mortgage debt on a fixed rate from 32% in 2012 to 49% in the second quarter of 2015. With hindsight, it is worth noting that mortgage rates have followed a downward trend during the same period and so the benefit of a fixed rate may have been piece of mind rather than financial. However, there are now tentative signs that mortgage rates have bottomed out.

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Data on the actual length of fixed rate periods is limited (let me know if I’ve missed it), so to estimate this I’ve used data on average mortgage rates for all fixed lending compared to the average rate for different fixed periods. For both new lending and outstanding lending (as per the charts below), the overlap suggests that most mortgages are fixed for a period of five years or less. At a guess, the average is probably closer to two years. That means many recent borrowers are likely to exit their fixed rate period into a market with rising interest rates and tougher lending criteria. That could cause problems for some borrowers and particularly if their mortgage was arranged prior to the introduction of the Mortgage Market Review rules…

British homeowners must remortgage NOW

The Express – By Lana Clements

BRITISH homeowners are being urged to remortgage NOW to escape “bonkers” new EU rules that come into force this autumn.

Personal finance expert Martin Lewis, founder of website MoneySavingExpert.com, has advised mortgage holders to check they are on the right deal and look for a better rate as soon as possible.

The new EU laws could see UK homeowners stranded on their lender’s expensive Standard Variable Rate (SVR) when their mortgage term comes to an end.

The  EU ‘Mortgage Credit Directive’ officially comes into force in March  2016 but can be backdated by six months.

In effect, the directive is an extension of the mortgage affordability criteria that was introduced into Britain last year.

The stringent rules stress test borrowers to make sure they can afford their mortgage deal, not just now but if interest rates were to rise to six or seven per cent.

Under British rules lenders can bypass the checks when an existing homeowner is remortgaging. But under the EU directive lenders won’t be able to do this…