Uncharted waters for House Prices: M4B

Uncharted waters for House Prices: M4B

The low-inflation environment for the UK will have massive implications for the world of mortgages, David Whittaker has claimed.

The managing director for national advisory firm Mortgages for Business said: “We have entered completely uncharted economic waters – whether or not the UK is in outright deflation right now in April. There will be massive implications for the world of mortgages.”

He claimed that cooling house prices were likely to pick up again, as a result of a “potent diet of record low mortgage rates and long-term borrowing costs falling”.

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Mr Whittaker said: “The effects are also far from uniform, and will stimulate remortgaging and buy-to-let more than high loan-to-value consumer loans.”

And he warned: “Beneath all of the economic data looms a political stability that is about to be shaken to the foundations by the most uncertain general election in a generation.”

His comments came as ONS figures showed persistently low rates of CPI, at 0 per cent.

Industry reaction

Peter Williams, executive director of IMLA, said: “The ONS data suggests that actions taken by the Financial Policy Committee to dampen growth last year have done their job and put the housing market on a more stable footing, for the short term at least.

“However, in part the slowdown has only been possible by squeezing potential buyers out of the market by restricting access to finance.”

Key Points:

UK house prices increased by 7.2 per cent in the year to February 2015, down from 8.4 per cent in the year to January 2015.

Annual house price growth is showing signs of slowing across the majority of the UK.

Annual house price increases in England were driven by an increase in the east of 10.7 per cent and in London of 9.4 per cent.

Source: ONS