Posted by John Yerou
on May 20th, 2013 06:00am in
Last Updated on August 14th, 2018 20:04pm.
The housing market has bounced back in a big way – and home prices have increased to keep up with this trend in a major way over the past month.
While this isn’t necessarily good news for anyone looking to secure a home loan, owners looking to sell their homes will indeed be happy to learn that the price of the average home increase by around 2.1 per cent over the past 30 days. This has added around £5,000 to the price of your typical home, leading to an average price of almost £250,000.
On top of that, house values have risen by more than £20,000 year-on-year, new research has found. Over the past 12 months, the increase works out to something akin to prices going up by around £175 every day – leading to a new average home price of £249,841.
So what’s been driving this amazing growth over the past year? Well, industry insiders believe that the drop in mortgage prices has played a massive role; on top of that, the return of consumer confidence after a long dry spell has had a knock-on effect with these newly affordable home lending products – and indicates that the economy may finally be on the road to recovery without worries of a double-dip or triple-dip recession.
Still, it’s not all coming up roses for prospective home buyers looking to secure a home loan. The best and most affordable mortgages are still being reserved for those borrowers who can afford to put down a larger-sized deposit, which grants them an attractive interest rate and low arrangement or booking fees; however, if you can only scrape together enough cash for a 5 per cent or 10 per cent deposit you’re going to be harder-pressed to find a lender willing to offer you a headline rate or charge you anything less than at least £1,000 in fees.
In this way, the housing market is a bit like a snake eating its own tail, as higher average home prices mean that borrowers will need larger mortgage loans to cover the heightened costs, which lead to larger mortgage payments and more cash needed up front either in the form of a deposit or a mortgage fee. This will slowly begin to weed out those who need the most help in securing a mortgage – anyone looking to take their first steps up the housing ladder – and it’s for just this reason that the Government is working so hard on providing extra help to this particular class of Brits; with any luck all the planned government schemes will end up helping and not just result in a spanner being lodged deep in the works of the housing market!
Author: John Yerou
John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.