According to the UK’s largest lender the Halifax annual growth is at 6% after eight months of rising property prices.

The Halifax has recorded eight months of prices increases with the September higher by 0.3% and over the last twelve months the growth has been 6%.

Average house prices are now £170,733 and this remains lower than the recorded level reached in August 2007 of £199,612.

One advantage of rising house prices for homeowners is remortgage buyers can now release capital for home improvements such as adding an extension, bathroon or new kitchen.

Limited supply of homes

The recent rise is due to mortgage finance being, made more available with government schemes such as Help to Buy, Funding for lending and low interest rates are helping first time buyers.

A lack of supply of homes on the market means demand exceeds supply although increasing house prices are encouraging more people to put their properties on the market.

There may be fewer suitable homes on the market as the equity release buyer can avoid downsizing and agree a lifetime mortgage to access cash to spend on home and garden improvements or even pay for care at home.

As property prices rise equity levels increase making it easier for people to consider a move and place their property up for sale.

House building is also picking up suggesting a revival in the housing market.

Fear of a property bubble

The stronger than expected rise in property prices has suggested the market may become overheated.

This could lead to borrowers overstretching with their mortgage leading to the risk of repayment problems when interest rates return to higher levels.

For home movers wanting to trade up when prices are rising, they may find their next property is more expensive which means they need a larger deposit or mortgage.

Greater interest in the Help to Buy scheme could fuel a rapid rise in house prices.

The Help to Buy scheme offers a government backed mortgage by adding 15% of the loan allowing the borrower to place a deposit as low as 5% for new builds or existing homes.

The scheme is not available to switching remortgage buyers or buy-to-let investors as it promotes homeownership for people that are renting.

The second phase of the scheme is likely to popular as the government have brought forward the launch date further promoting fears of a property bubble.

What are your next steps?

Talk to our London City Mortgage advisers if you are an older homeowner releasing equity from your property, we can recommend the lifetime mortgage to access wealth to consolidate debt, gifting to a family member or buy a more expensive home.

Learn more by using the equity release calculator, property value tracker chart and mortgage cost calculator. Start with a free mortgage quote or call us and we can take your details.

At LCM our mortgage brokers can provide advice if you are a first time buyer, moving home, want to remortgage your existing home to a new cost effective mortgage deal or are a buy-to-let investor.

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