Mortgage lender Nationwide released data showing house prices in the UK are 10.9% higher for the year the first double digit rise since April 2010.
The Nationwide figures also show this is the fastest house price rise since June 2007 and are up 1.2% in April with the average UK house price now at £183,577.
Although the UK figures are up 10.9%, in London prices are almost 20% higher than they were before the financial crisis.
Rising house prices means first time buyers would require a higher deposit, larger mortgage or higher earnings to purchase their first home.
In contrast the Land Registry data which shows all sales including those for cash recorded a 0.4% decrease in prices.
The Halifax have also released their figures showing UK house prices were higher buy 8.5% for the year, 2.3% higher for the quarter to April although for the month of April house prices were 0.2% lower.
Low supply of houses
The main reason for the rise is the lack of properties according to the Royal Institution of Chartered Surveyors (Rics).
During April the demand for homes increased whereas the number of properties on the market reduced for the fourth consecutive month.
The lack of suitable properties on the market at an affordable price for home movers means they must continue renting and saving for a bigger deposit.
There may be fewer suitable homes on the market as remortgage buyers can avoid downsizing and agree a lifetime mortgage to repay the residential loan to their lender.
Rics has said that on average surveyors are expecting house prices to rise by 6% a year for the next five years across the UK.
Earlier in the week the voiced concerns that the UK needs to control house price which are rising at an alarming rate when compared to rents and household income. This has been helped by the government’s Help to Buy scheme.
Mortgage rules could slow demand
The Mortgage Market review (MMR) impacts first time buyers, home movers and remortgage buyers introducing tighter underwriting standards for mortgages lenders to assess affordability.
MMR introduces tighter underwriting standards for mortgages lenders requiring them to assess affordability.
Home buyers must providing three months of bank statements showing their ability to pay for a mortgage now and in the future when interest rates rise. This is likely to result in more borrowers being refused a mortgage as it not affordable.
In some cases some home buyers may be able to have a larger mortgage than expected if they have low expenses with multiples of earnings as high as seven or eight times compared to the usual maximum of four times.
The equity release mortgage buyer can secure fixed rates typically from 5.9% upwards without any evidence of earnings, important for borrowers with only pension income.
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, home improvements or gifting to a family member.
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.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the equity release calculator, property value tracker chart and mortgage monthly cost calculator.
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