The relentless increase of house prices just seems to go on and on. The average house price in the UK is now over £197,000 and the annual growth rate is more than 7%. The combined affects of strong demand from buyers and a short supply of sellers willing to sell just feeds the price furnace further heating up the market to new highs.
In addition to this the growing number of “buy to let” landlords are also helping to keep demand strong and push up prices.
Northern Ireland's market has accelerated fastest this year with reported rises of over 25%. Scotland's prices are up 12% and Wales and England's rates are rising steadily at around 7%.
The N.Ireland market is now the second most expensive property market in the UK after England. The average property in England is currently over £205k compared to 166k in N. Ireland. Wales has an average of £158k and Scotland of around £145k.
Bungalows are indicated to be the property most in demand this year causing bungalow prices to rise around 5%. Semi detached properties are also in high demand showing price rises of around 3%
All these prices hikes are doing no favours at all for first time buyers making it extremely difficult for them to get their first foothold on the property ladder. To get started many 1st time buyers are having to rely on their parents re-mortgaging their homes to supply them with extra cash for their deposit. The average first time buyer is now paying over £152,000 for their 1st property which is an increase of 6 to 7% over last year.
It was previously predicted that a slow down in price rises would be upon us by this stage of 2006 but with record price rises in August and September these predictions seem far closer to farcical than resembling any relic of the truth.
Leading economists predict that the rising impact of mortgages on peoples take home pay coupled with rising energy prices and a possible rate rise in November should cause an expected slow down in price rises, although activity on the house market should remain fluently buoyant for the rest of 2006.
Bank figures are showing that number mortgage applications approved for house buying has risen to the highest level since the start of the year.
With the popularity of mortgage borrowing on the increase, the type of mortgage that is really starting to shine is the 2 Year Fixed Rate Mortgage. Fixed rate mortgages are generally considered to be the safest and most sensible type of loan to take when buying a house, especially for first time buyers. This is because the rate is fixed at a promised rate for a set period of time which prevents any unwanted surprises. Unlike other mortgages they do not offer the possibility of a drop in rates which might be expected from for instance a Tracker Mortgage but they do however offer buyers peace of mind, safe in the knowledge that their rates aren't going to rise.
The popularity of 2 year fixed rate mortgages has probably tied in with the increase of buy to let landlords who will want to be sure that their rent payments will cover their mortgages. New buyers are also favouring this mortgage in these uncertain times keeping then free from surprises whilst having the two year fixed rate instead of any longer fixed terms gives them flexibility to reassess the market once their term is up.
Another reason for the rise in popularity of this kind of mortgage is probably because for the first time in a long while 2 year fixed rate mortgages are currently in most cases cheaper than 2 year discount mortgages, but this is set to change.
Literally speaking the only downside to fixed rate mortgages would be if the bank of England where to cut interest rates leaving borrowers with a relatively uncompetitive mortgage, however this is unlikely in the short to mid term.