Mortgage Approvals Rise

The Bank of England today released its figure for mortgage lending in the month of May. To the surprise of many analysts (and possibly to members of the Bank itself), the figures showed an increase in the number of mortgage approvals when compared to the month of April.

The figures for May show loan approvals standing at some 114,000, up from 109,000.

The total amount of mortgage lending did see a dip, however, to £8.701 billion (a decrease from £8.763 billion in April).

It seems that, in general terms, the performance of the UK housing market remains strong. Interest rate rises don't appear to have had a major impact in terms of stopping people taking out new mortgages, or reducing house prices.

Nationwide figures for June

The Nationwide has annouced its figures for the housing market, telling us all how the market performed in June 2007. Quite how it produces these figures, considering we are not at the end of the month yet, is a mystery to me. Anyone have the answer?

Anyway, putting the logistics to one side for a moment, let's look at what they are saying. I've got my hands on the Press Release, so let's take a look at some of the key points.

They reckon that "house price growth bounced back" in June, with the monthly rate of increase showing at 1.1%. This compares to a rate of increase in May of 0.5%. Prices are now increasing more than twice as fast as last year - with the rise in value of the average UK property being equivalent to around £50 per day.

The annual rate of increase now stands at 11.1% and they put the price of an average home at £184,070. They do, however, predict a slowing in the market during the second half of the year. Their prediction is that house prices will rise between 5% and 8% in 2007 as a whole.

The Nationwide also comment on the likelihood of interest rates rapidly reaching 6% and, while welcoming Gordon Brown's commitment to housing, they suggest that any new measures will need to be thought through carefully.

House Price Growth to Slow?

Housebuilder George Wimpey plc is predicting a slowing of the UK property market, largely due to recent increases in interest rates.

In separate news, the deputy governor of the Bank of England, Sir John Gieve, has suggested that interest rates will need to rise again in July in order to cool the housing market (Daily Mail, 26 June 2007).

He pointed out that: "House price inflation in London has outstripped the rest of the UK with prices in the smartest areas of Kensington and Chelsea climbing by 40 per cent since the start of 2005".

Change of Prime Minister

Tomorrow will see Gordon Brown take over as the UK Prime Minister. For the last 10 years the economy has been dominated by Mr Brown in his position as Chancellor of the Exchequer - now that he's moving into 10 Downing Street, many analysts will be interested to see how the economic outlook will change.

Over the next few weeks we are likely to see if there is likely to be any early impact for the housing market.

In one other piece of news, it seems that many more of us have started to take out so-called offset mortgages. For those of you that are unfamiliar with these types of mortgage, they allow you to "off-set" your mortgage with money that is kept in your bank accounts.

So, for example, if you have a £200,000 mortgage but had £20,000 in a savings account then you would only pay interest on £180,000.

According to figures from the Council of Mortgage Lenders, 170,000 offset mortgages were taken out last year (a rise of 49% when compared to the previous year). These mortgages are now worth some £30 billion in total.

King issues borrowing warning

The last 24 hours have produced a number of articles in the printed press about the UK housing market.

Many focus on the minutes of the last meeting of the Bank of England's Monetary Policy Committee (earlier in June). The meeting led to a decision to leave UK interest rates unchanged at 5.5%, though the minutes reveal that 4 of the 9 members of the committee were in favour in a further rise in interest rates. These included Mervyn King, the Governor of the Bank of England.

This news has increased speculation that July may bring a rise in interest rates, possibly taking them up to 5.75%.

Related news items consider what effect interest rate rises are having on the UK property market. Mr King gave a speech where he suggested that borrowers and lenders need to be careful to ensure that they don't over-stretch.

In his article in The Times ("Housing market studies differ on impact of rates"), Gabriel Rozenberg considers recent data on the UK housing market that has been released by the Royal Institution of Chartered Surveyors (RICS), the Halifax and by the Department for Communities and Local Government. The three separate sets of data appear to point in different directions when it comes to deciding whether the recent interest rate rises have led to the hoped for cooling down of the housing market.

Elsewhere, Bradford & Bingley have reported that they see the buy-to-let sector continuing to perform well during the remainder of 2007. This suggestion does not appear to be universally supported, judging from the media reaction.

Buy-to-Let Landlords

There is something of a debate at the moment about "buy-to-let" landlords and their effect on the UK property market.

The advent of property as a pure investment (rather than simply as a place to live) is undoubtedly having some sort of effect on the property market and on the economy as a whole. With buy-to-let (BTL) landlords happily snapping up properties around the country, they have helped to drive the rising house prices of the last decade.

Would-be first time buyers complain that BTL'ers are helping to keep them out of the market. This argument is argued particularly strongly on the house price crash website's bulletin boards.

Ruth Sunderland asks Who can blame the buy to let landlords? in her recent piece in The Guardian, taking a somewhat different approach to the issue.

One thing that will be interesting will be if there is a house price crash (or correction), as there seem to be even more individuals exposed to shifts in the UK property market now than was the case in the 1980s.

Land Registry Data

For my first "proper" post I'd like to take a look at the subject of house price statistics. There are a number of organisations that provide figures on UK house prices, including the likes of Halifax, Nationwide and various estate agents.

Most such organisations have a vested interested in ensuring that we all see UK house prices on an upward curve. For a more objective view of the state of the market, my preferred information source is the data provided by the Land Registry. Their information is based on actual selling prices, which I think gives a better guide.

Welcome!

Well, this is my first post on my self-titled UK property blog!

Welcome to the blog and thanks for taking the time to find your way here.

I'm intending to use this space to discuss all aspects of the UK property market, from the latest house price data, to thoughts on estate agents and other property professionals. It will hopefully be a source of advice and information for home-owners, tenants, landlords and other interested parties.

It's my intention to update the blog regularly with plenty of UK property news - I look forward to hearing your comments.

Phil