Mortgages taken out by home buyers increase says Bank of England although house prices slowed for the seventh month in a row.
Data from the Bank of England shows the number of mortgages taken out by first time buyers, home movers and remortgage buyers increased in February.
There were 61,760 mortgages approved for house purchases including first time buyers compared to the average over the past six months of 60,750. This is still 18.1% lower than the recent peak of 75,453 in January 2014.
From the figures the value of total house purchases has decreased from £10.7 billion in January to £10.2 billion in February although the value of remortgages increased from £5.1 billion to £5.3 billion.
House price growth slows
The Nationwide house price index shows that annual house price growth has slowed from 5.7% to 5.1%.
During the month of February house prices increased slightly by 0.1% resulting in a small increase in the average value of UK homes from £187,964 to £189,454.
Prices are now 2% higher on average than before the financial crisis, however, there are many areas in the UK where prices of homes are below and homeowners remain in negative equity.
The largest annual house price growth was in London and the South of England although the pace is slowing. For the quarter this softening was most noticeable in London.
For older homeowners the considerable value in their property allows the equity release buyer to access money using a lifetime mortgage to maintain their lifestyle or gift to a family member.
The Nationwide sees house building in areas where house prices are increasing as a means of making home purchases affordable to first time buyers.
Housing supply slow to respond
According to Robert Gardner, chief economist of the Nationwide, there has only been a modest increase in new-build homes.
In 2014 there were 119,000 new-build homes in England and increase of 11% on 2010 but 25% below the average rate of construction for the five years before the financial crisis in 2008.
House building is slow to respond to the rise in prices although there is evidence that as prices increase, so does the level of house building.
From 2011 to 2014 in the South East and South West house prices are high at six times earnings and the growth in housing stock is at 2.1% and 2.4% respectively.
In contrast in the North and North east house prices are more affordable at four times earnings with housing stock increasing by only 1.1%.
London housing supply still remain sluggish with very high prices at eight times earnings and over the same 2011 to 2014 period housing stock is increasing at 2.6% when we would have expected a rise of 3.1%, says the Nationwide.
The lack of new homes could mean remortgage buyers staying in their current property and increasing their mortgage to releasing capital which they can use to improve their home.
What are your next steps?
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For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to maintain your lifestyle, repay an interest only mortgage or even gift to a family member or friend.
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