December 20, 2006

Mortgage approvals and house prices up

Link: Mortgage approvals and house prices up

Filed under: Property Market, Money by Brian Turner


Mortgage approval rates reached another record increase - at the same time as a report declares strong housing inflation for 2007.

Mortgage approval rates increased by £6.5 billion in November - a record monthly record score - according to the British Bankers’ Association.

And Lombard Street Research - which posted one of the most on-target predictions for 2006 - has reported that they see property prices rising up to 15% in 2007.

Lombard Street Research had previously predicted a figure of 10% over the UK for 2006, while other analysts expected stagnation, or even a fall.

Meanwhile, the Nationwide has already predicted a 7% increase for 2007.

Lombard Street Research states that high mortgage approval rates, and short supply of property, will continue to force house inflation up through 2007.

This is regardless of interest rate rises, which have been widely seen as too little too late to put the brakes on the property market.

Additionally, they stated that there was unlikely to be a property bubble unless current growth continued as is into 2008.

This is in stark contrast to the US property market which has similarly boomed - but now stagnated.

House builder Wimpey has already warned investors that it has written down £40 million in US assets, selling off land and suspending new development projects.

Overall, the UK property market has moved on despite the impact of a slowed US property market and continued uncertainty in the world economy.

However, though further interest rates look likely next year, existing homeowners are likely to continue to take advantage of generous remortaging offers to release home equity for new purchases - whether for family, or investment, purposes.