Let's start this month's update with the housing market.
Nationwide Building Society
Annual Change +4.4%
Annual Change +6%
Both indices report an increase in prices which is positive although it hasn't felt that way on ground level where activity seems on the slow side. The annual changes show that this has been a good year to own a property and remains the reason why so many people have invested in property rather than pensions and banks!
The low number of homes on the market and the modest new homes output will keep the supply/ demand balance fairly tight even if economic conditions worsen as expected. The affordability pressures from the sustained period of house price growth in excess of earnings increases appear to have dampened demand somewhat compared to the start of the year which is evidenced in the slowing of house price inflation.
This does not imply we are going to see a drop in prices as the shortage of property for sale should help support price levels over the coming months.
Let's hope for a busy January 2017!
And what of interest rates?
The Bank of England has kept it's Base Rate at the record level of 0.25% and fixed rates continue to astound with how low they are are - for both short term deals (2 years) and the long term deals (5 years). If you are not sure what a good rate looks like now, then please just call 0844 736 1920 to find out!
There are always contrasting views on what will happen with rates going forward and this month is no different. There seem to be two differing predictions:
a) No change in 2017. Rising inflation would normally mean a rate rise but the Bank of England have indicated that they are willing to accept this given the overall position of the economy.
b) Rate rises in early 2017. The Bank of England will not want the difference between interest rates in the USA and the UK to be too great as it will put undue pressure on the pound. The US have already said that they will be raising interest rates very soon and so we are expected to follow suit.
As usual, we will have to wait and see to find out which view is the correct one! Or it is more likely that a third option will emerge shortly!
The mortgage market remains fairly buoyant with lenders showing a willingness to provide funding and some loosening of criteria in places to keep the money flowing.
However, as previously mentioned the buy to let market is getting some attention from the regulator and those changes will start coming into force in January 2017 (see the post on 10th November for the changes).
Most lenders have already implemented those changes over the last month which has seen Precise, Principality Building Society, Virgin, Leeds, Nationwide (The Mortgage Works), Coventry Building Society, BM Solutions, Santander, Newcastle Building Society and Platform Homeloans all amend their lending criteria.
As a reminder, it just means that going forward if you own a buy to let, you are likely to pay more tax and get less mortgage for your rent. So this area of the market is being hammered!
The rest of the mortgage market is performing well and there remains some great rates available.
I will provide an update in next few days on our opening hours over the Christmas period and if I do not speak to you, have a great Christmas and New Year!
YOUR PROPERTY IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE