Housing wealth jumps year-on-year

Housing wealth jumps year-on-year

Total housing wealth has risen 8 per cent to an estimated £4.7trn in 2014, compared to the previous year, latest housing wealth data from the Council of Mortgage Lenders has shown.

According to the trade body’s analysis, the number of people with a mortgage has been trending down, while the number of people owning outright has been increasing.

The office for national statistics estimated that the total stock of private housing was worth £4.4trn in 2013. Out of 17.7m homeowners, 8.3m own their home outright, with no mortgage.

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This, coupled with substantially fewer first-time buyers entering the market, has meant mortgaged equity has remained steady over the past seven years to 2014, increasing by just 3 per cent – approximately £30bn over the period.

In contrast, the value of unmortgaged property increased by £350bn, or 25 per cent in the same period.

The average mortgage term has remained low, thanks in part to low inflation. The average outstanding loan-to-value ratio of homeowners with a mortgage was 53 per cent in 2014, up slightly from 50 per cent in 2007.

Adviser view

Jason Hollands, managing director of business development and communications at Tilney Bestinvest said: “While the CML data paints a rosy picture of household balance sheets improving as a result of house price inflation shrinking loan-to-value ratios, that is only of cheer to people if their so-called comfortable house prices are not overvalued.”