Mortgage And UK Housing Markets Experience Fluctuations

Mortgage lenders and property agencies have recently released new figures for the UK housing market, showing a mix of results. Despite some conflicting data, the overall sentiment among analysts appears to be optimistic about potential improvements in housing market activity.

According to the latest survey by the Rightmove property agency website, property prices are rising again. Rightmove reported the largest average monthly increase in house prices in two years for February, with the average residential asking price in England and Wales reaching £201,600. The agency attributed this rise to a shortage of sellers and increased demand, particularly from buyers at the lower end of the market, which is expected to impact the higher end of the property ladder positively.

However, Miles Shipside, Rightmove’s commercial director, cautioned that sellers should not become overly ambitious, as this could derail the recovery if affordability becomes stretched again.

These findings contrast with the FT House Price Index, which indicates that the recovery in house prices since the autumn has been slow and did not accelerate at the beginning of 2006. The FT's data, based on Land Registry information, suggests a more subdued market compared to the buoyant figures from Rightmove and lenders like Halifax and Nationwide. Additionally, separate mortgage lending data showed a decrease in lending for January compared to December, though it was higher than the previous year.

Looking ahead, some analysts anticipate that potential government action through the Bank of England could boost the housing market. Howard Archer, chief UK economist at Global Insight, predicts an interest rate cut early in 2006, which could invigorate the housing market. Mortgage comparison site Money net also expects that a rate cut will stimulate the market, encouraging more people to seek favourable mortgage packages.

Ray Boulger, an independent mortgage adviser from John Charcol, expects at least two quarter-point reductions in the base rate this year and anticipates house prices will rise by about 5.5%.

The Council of Mortgage Lenders’ recent figures present a mixed picture: gross mortgage lending in January rose by 32% to £23 billion compared to January 2005’s £17.4 billion, but this was down from December’s high of £26.9 billion.

Despite the contradictory and inconclusive nature of recent reports, Howard Archer noted that the underlying mortgage lending slowdown in January follows a strong performance in December. Overall, the data suggest a marked improvement in housing market activity, supported by Rightmove's latest report.

Disclaimer:

All information in this article is for general informational purposes only and should not be construed as advice under the Financial Services Act 1986. You are strongly advised to seek appropriate professional and legal advice before entering into any binding contracts.

Useful resources:

- Financial Times House Price Index: [FT House Price Index](http://news.ft.com/cms/s/1d089640-fb60-11d8-8ad5-00000e2511c8.html)

- Money net Mortgage Comparisons: [Money net Mortgages](http://www.moneynet.co.uk/mortgages/index.shtml)