House price inflation reaches 10.5% as Bank of England warns of bubble
Office of National Statistics (ONS) data shows house price inflation reached 10.5% in May the highest level for four years.
The year on year rises in UK house prices of 10.5% for June is higher than the 9.9% for the previous month driven higher by London, where prices are up by 20.1%.
Removing figures for London and the South East, UK house prices are up a more modest 6.4% year on year and the ONS say the average house price is now £262,000.
These figures compare to the Nationwide showing UK house prices rising by 11.8% for the year and the Halifax 8.8% rise.
Warnings of property bubble
The Bank of England’s governor Mark Carney has warned a property bubble in the medium term is the biggest risk to economic recovery.This is the main reason why the Financial Policy Committee (FPC) introduced measures to limit the number of mortgages where the multiple of income exceeded 4.5 to no more than 15% of mortgage approvals.
He said a large number of highly indebted households could tip the economy back into recession. British people pay their mortgages with very few defaults and high multiples mean they make savings elsewhere, reducing spending in the economy.
Help with the deposit for a new home can come from family members as the equity release buyer can access cash using a lifetime mortgage and give to a child or grandchild.
The risks are rising as the ONS figures show the average house price paid by first time buyers is now £202,000. House price inflation for first time buyers is 11.3%, higher than home movers.
Home movers experienced lower inflation of 10.1% over the year with an average house price of £301,000 compared to London prices of £492,000.
House prices higher than pay rise
The Office for Budget Responsibility (OBR) have said that house prices will outstrip the rise in pay for the next five years, based on a new model for calculations.With only moderate increase in the supply of new-build properties, house prices will consistently increase above the rise in annual earnings.
One advantage of rising house prices for homeowners is remortgage buyers can now release capital for home improvements.
Only a high level of house building would be able to prevent a rise in loan-to-income levels. This would mean homeowners will spend more of their income on mortgage repayments as a percentage of their income.
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.Start with a free mortgage quote or call us and we can take your details. Learn more by using the mortgage cost calculators, equity release calculator and property value tracker chart.
For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to improve your quality of life or reduce inheritance tax owed by your beneficiaries.
Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.
Mortgage Best Buys
These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.
 |
| 1.16% Fixed Rate |
| 60% Loan to Value |
| £1,525 App Fee |
| Until 01/11/2022 |
| Reverts to 4.09% |
 |
| 1.18% Fixed Rate |
| 60% Loan to Value |
| £1,034 App Fee |
| Until 31/10/2022 |
| Reverts to 3.59% |
 |
| 1.19% Fixed Rate |
| 60% Loan to Value |
| £999 App Fee |
| 2-Years Time |
| Reverts to 3.59% |
 |
| 1.17% Fixed Rate |
| 60% Loan to Value |
| £1,025 App Fee |
| Until 31/09/2022 |
| Reverts to 3.59% |
CATEGORIES
The latest mortgage news
Fifth of homeowners use mortgage advance to go green
As energy bills are rising 22% of homeowners are using mortgage advances to improve the efficiency of their homes to reduce costs.
Equity released hits record levels as more people access cash from homes
Homeowners accessing cash from their properties increased 26% over the year with over £3 billion of equity release in the first six months.
Home movers drop over a third in 2022 compared to last year
The stamp duty holiday last year produced bumper demand from home movers now down a third but still above pre pandemic levels.
Property market is cooling after sixth house price record
Asking house prices rise for the sixth record in a row to £369,968 as demand to buy continues although at a slowing rate.
Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.
Equity Release - Equity Released from your home will be secured against it. Mortgages – Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. Think carefully before securing other debts against your home. The information contained in this website is subject to the UK regulatory regime and is therefore intended for consumers based in the UK.
CONTACT
Address:
9th Floor, 30 Crown Place
London, EC2A 4EB
Phone:
0800 955 0058
Email:
info@londoncitymortgages.co.uk
London City Mortgages Limited is a registered company in England & Wales under company number 09278987. London City Mortgages Limited is an Appointed Representative (FCA no. 655965) of Blackstone Moregate Limited (FCA no. 459051) which is authorised and regulated by the Financial Conduct Authority. LCM and LCM Equity Release are trading names of London City Mortgages Limited.