House prices in London are rising at a faster annual rate compared to other parts of the country and benefits families in the capital.

The North South divide appears to be at its highest ever as London prices are rising at twice the rate of surrounding regions.

For buy-to-let landlords with existing properties the rise in house prices creates more equity which they can benefit from if they sell in the future.

The Nationwide Building Society reports that prices in London are rising at 10pc annually compared to the UK's weakest region, the North, where they are inching up at just 0.2pc.

Higher prices is good news for Londoners as the average home in the capital is now £331,000 compared to only £117,000 in the North and even less in Northern Ireland.

Increasing property values in London are likely to continue to rise and benefit existing homeowners such as remortgage buyers as they have the opportunity to release capital which they can use to improve their home.

Rising house prices allows older equity release mortgage buyer to stay in their home rather than downsize avoiding the expense of moving by accessing the wealth in their property to improve your quality of life or gift to a family member or friend.

House price inflation spreading

However, Robert Gardner, the Nationwide's chief economist, said house price inflation was now at its highest pace with price rises beginning to bleed out from the capital and into other areas.

For home movers rising prices means the gap between their current home and the next increases and they need a larger mortgage or higher earnings.

Mr Gardner recognised that a housing bubble was a potential risk because borrowing could become inflationary.

The Nationwide now require first time buyers to commit 29% of take home pay to their mortgage, but the low interests rates have supported the affordability of higher borrowing levels.

To reduce your mortgage repayment costs home movers can avoid their lenders expensive variable rate and switch to a preferential deal when they buy their next property.

There are calls for intervention in the markets, but Martin Beck, UK economist at Capital Economics believes that if mortgages become unaffordable this will act as a natural break on long term price rises.

There are no plans for lenders to re-introduce 100% plus mortgages and self-certified loans that inflated the mortgage market.

What are your next steps?

Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.

Learn more by using the mortgage cost calculators, property value tracker chart and equity release calculator. Start with a free mortgage quote or call us and we can take your details.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything such as maintain your standard of living as costs rise or pay for care at home.

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