More mixed messages on the housing market

Posted in 'Neighbourhood' by Richard Catlin

15 March 2010

The promising noises made by the mortgage industry at the end of last year have been quickly put into perspective by a dramatic slump in mortgage lending in January.

Overall, the number of home loans fell by almost 50% between December and January, with first time buyers particularly hit. Although January is recognised as a slow month, the start of 2010 saw the lowest gross mortgage lending total for almost 10 years.

The end of the Government’s year-long concession on Stamp Duty – increasing the threshold at which it is payable from £125,000 to £175,000 – is seen as one of the main contributors to the lower-than-hoped-for figure. A more detailed analysis of sales figures supports this view.

Whereas December saw a 63% jump in the number of first time buyers purchasing houses up to the £175,000 threshold, this figure then slumped by 80% in January – indicative of buyers pushing sales through before the end of the year to beat the cut-off.

Figures from the Halifax claim that house prices fell by 1.5% in February, with the end of Stamp Duty relief blamed once again. Even the recent poor weather is reported to have had an effect on house prices, with potential buyers deterred from viewings.

As we’ve reported in the past, it doesn’t take a huge peak or trough in house price data to set the media into a spin, often without consideration of seasonal trends or regional differences across the UK. No one wants to make brave predictions about which way house prices and mortgage lending might go in 2010, but there are steps that you can take to make sure you’re in the best possible position to get a mortgage (or remortgage) when the time is right.

It is widely acknowledged that although the number and variety of available mortgage products is much better than a year ago, lenders remain picky and first time buyers are still out in the cold. It is vital to ensure that your credit rating is in good shape if you want to qualify for a competitive rate.

Checking your credit file online will allow you to see the information that lenders use when assessing your application, and to make sure that everything is correct.

In terms of house prices, there’s no more reliable indicator of how house valuations in your local area are changing than the actual prices that properties have sold for. Our free Check your postcode Service on checkmyfile lets you check the average house prices for any postcode in the UK, and see how each property type in your home area is faring.

Check house prices for free or check your credit report online