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Stable market drives demand for cheap mortgages

Date: Tue, 22 Nov 2005

The slow recovery of house prices could help to boost demand for cheap mortgage deals.

The latest figures from the Office of the Deputy Prime Minister (ODPM) show that following the last two months of stagnation, growth is up by 0.5 per cent this month as house prices rise 3.3 per cent compared to 2004 figures.

The ODPM figures show that the average UK house price in September was £186,723 – 0.3 per cent higher than the previous month. The data, which is based on property completions rather than mortgage approvals, is likely to boost consumer demand for mortgage products which offer value for money.

However, Howard Archer, Global Insight chief economist, warned that buyer interest could quickly fade if prices begin to increase too quickly over the coming months.

"Indeed, with interest rates likely to stay on hold in the immediate future at least, and average earnings growth remaining relatively muted, affordability ratios will start to deteriorate anew if house prices start to move significantly back up," he added.


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