Leading mortgage lender Nationwide has released data showing house prices are 0.8% higher in August compared to July.

Despite an apparent slowing of the housing market following a change in mortgage rules introduced by the mortgage market review (MMR) UK property prices continue to rise in August by 0.8% month on month compared to 0.2% rise for July.

The Nationwide have said that house prices are up 11.0% year on year this month compared to 10.6% last month with the average value for a home at £189,306.

Figures from the Land Registry also suggest prices are rising and year on year for London house prices are 19.3% higher, South East is 10.2% and the East of England 8.3% higher.

One advantage of rising house prices for homeowners is remortgage buyers can now release capital for home improvements.

Housing market may be cooling

Data from Hometrack shows that the number of sellers achieving their asking price is 95.9% in August which is lower, for the third month in a row, than the figure of 96.8% achieved in May.

Hometrack has warned that if this widening gap achieves only 94% of sellers achieving their asking price, then house prices will start to fall.

In London Hometrack figures showed month on month in February that 87% of postcode areas experienced an increase in price whereas this month only 11% of postcodes in London have increased.

For home movers leaving areas with the highest rising property values to areas with lower growth, they may have extra equity for a deposit to buy a larger home or can reduce their mortgage.

London prices could remain level

London house prices have been rising as much as 37% year on year in July such as Lambeth. The strong rises of prices in London are now predicted to growth at a modest 5% in 2015 and remain level in 2016 according to property firm Savills.

Over a five year period London is expected to see property price increases of 24.4% compared to the South East of England of about 31.6%. This is based on the assumption that interest rates will increase to 5% by 2018.

A combination of rising prices and interest rates would add more to the cost of a mortgage for first time buyers and owner-occupier homeowners.

The rise in house prices allows the older equity release mortgage buyer to access cash in their property for any purpose such as home improvements, holidays or even buy a more expensive home.

Savills estimates that the mortgage interest cost to owner-occupiers is at £33 billion a year and a 2% rise in interest rates means a £2,360 average rise in interest payments for England and Wales and £4,000 cost for London.

This would mean higher income multiples for borrowers and increase the risk to first time buyers and remortgage buyers that the repayments may not be affordable.

It would also mean buy-to-let mortgages could be harder to secure by landlords as the ability to borrow depends on rental incomes exceeding 125% of the mortgage interest.

What are your next steps?

Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.

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

For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to repay an interest only mortgage or help your children start or expand a business.

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