Despite the Nationwide saying the annual rate of house price growth remains “subdued”, Samuel Tombs – chief UK economist at Pantheon Macroeconomics – reckons the housing market is starting to benefit from recent lower mortgage rates.
He notes that November’s 0.5% month-to-month gain was the biggest since July 2018.
Fierce competition among mortgage lenders has seen the average quoted rate for a five-year, 75% loan-to-value, mortgage drop to 1.74% in October, from 1.80% in September and now is 30 basis points lower than at the start of the year.
“With loan-to-income ratios at record highs, even small changes in mortgage rates have a big impact on affordability,” Mr Tombs says, adding that the number of homes for sale also has contracted.
“All told, we look for year-over-year growth in house prices to continue to pick up over the coming months, reaching 2% by mid-2020.”
