UK house prices pick up in July

House prices picked up last month, according to Nationwide’s latest house price index, with annual growth up from 2% in June to 2.5% in July. Prices rose 0.6% month-on-month, the building society said, bringing the average cost of a property in the UK to £217,010. However, there has been little change between supply and demand and pressure on household budgets is likely to exert “a modest drag” on house price growth going forward. Halifax’s latest index paints a similar picture, putting the annual rate of growth at 3.3% in July, up from 1.8% in June. This is the largest increase since November last year. They put the average property price at £230,280 – the highest on record – but again suggests that the volume of transactions is likely to remain “broadly flat” this year.Rate rise impactA rate rise will have only a “modest impact” on homeowners, according toNationwide, with most having locked into long-term fixed rate deals. Robert Gardiner, the building society’s chief economist, said: “The share of outstanding mortgages on variable interest rates (and which are therefore likely to see an increase in payments if Bank Rate is increased) has fallen to its lowest level on record, at around 35%, down from a peak of 70% in 2001.”For those on variable rates, the building society said that for the average mortgage a quarter of a percentage point increase would increase monthly payments by £16 to £700, equivalent to £190 extra a year. However, he said: “While the impact for most borrowers is likely to be modest, it’s important to note that household budgets have been under pressure for some time because wages have not been rising as fast as the cost of living. Indeed, in real terms, after adjusting for inflation, wage rates are still at levels prevailing in 2005.”Keeping outgoings to a minimum
With many households feeling the pinch, and a rate rise pushing up borrowing costs, it’s essential for homeowners to regularly review their mortgages and ensure they are on the best possible deal. Millions of homeowners continue to languish on their lenders’ standard variable rates, despite the fact they may be able to remortgage to a much cheaper rate elsewhere. A broker will be able to explain which deals you’re eligible for, how much you could save, and can also help you through the application process.