Rate Cuts to Fuel House Price Rises, Halifax says
Date Published: 7 August 2024
Lower mortgage costs and more interest rate cuts could fuel a rise in house prices for the rest of this year, Halifax has said.
The mortgage lender’s prediction came after property prices ticked up in July following a flat few months. Halifax said recent mortgage rate drops were “encouraging” for first-time buyers, those moving along the housing ladder or those refinancing. But it warned affordability challenges and lack of available properties still posed problems for buyers. “Against the backdrop of lower mortgage rates and potential further [Bank of England] base rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year,” Amanda Bryden, head of mortgages at Halifax said.
Last week the Bank of England lowered interest rates to 5% – the first cut since the start of the pandemic in March 2020, but its governor warned not to expect a flurry of further reductions. The Bank’s rate dictates the cost of borrowing set by High Street banks and money lenders for the likes of mortgages and credit cards. Higher rates over the last two and a half years have put pressure on household finances, although returns for savers have improved.
While mortgage rates have fallen, deals still remain much higher than a few years ago, meaning homeowners refinancing or first-time buyers are facing increased costs. On Wednesday, the average two-year fixed mortgage was 5.74%, while the typical five-year deal was 5.36%.
The UK’s largest lender said a typical property cost £291,268 in July, up more than £2,200 compared to the previous month, “following three relatively flat months”. Ms Bryden said annual house price growth in the year to last month was 2.3%, the highest rate since the start of this year.
Halifax said the Northern Ireland continued to record the highest house price growth last month – 5.8% – compared with any or nation or region in the UK.
The only region to record a fall was eastern England.
Source: BBC News