National Mortgage Index March 2018

Diverging regional trends continue in February

February saw the market continue on its steady trajectory from January, with many key factors remaining broadly similar to the previous month.

Indices such as the Halifax and Nationwide both observed average annual house price growth that was still in positive territory, although at a more subdued level than we’ve seen over the course of the past few months. Correspondingly, transaction volumes in February, as measured by HMRC, also remained almost unchanged on January, indicating that the market was operating on a consistent basis overall.

Mark Carney’s comments in February with regards to probable interest rate rises in 2018 perhaps galvanised some homeowners who have been considering remortgages but not yet taken action to start to researching the market, following on from the nine-year high in January of remortgaging activity as reported by UK Finance. Our data indicates that 93.2% of those who did remortgage in February took a fixed rate product of some kind, only slightly lower than February 2017 when 94% of those remortgaging opted for a fixed rate deal.

First time buyer borrowing also appears to be on the increase after a strong January in this particular sector, with high LTV mortgages and other niche products, such as Family Assistance mortgages and Joint Borrower, Sole Proprietor mortgages helping those who otherwise would need to find large deposits to get into their first property. Our analysis suggests that the average cost of a First Time Buyer home fell very slightly in February on the previous month, however there was an average annual increase in real terms of £8,202.

Key market indicators in February include:

• Average purchase price was £245,605, which was hardly changed from £245,742 in January and only a slight increase of 1.7% on February 2017. That said, this masks a degree of regional variation in average purchase prices with some areas, such as the North West, West Midlands and South West, seeing far higher annual price increases in February 2018.
• The average First Time Buyer mortgage remained broadly similar in February at £155,691, only slightly increased on January (£155,465) but 5.46% higher than in February 2017.
• The average residential remortgage amount saw a slight increase in February to £172,133 from £170,102 in January, and remained broadly similar to the average in February 2017, which was £170,706.

The Royal Institution of Chartered Surveyors cited in their latest report that stock levels in the UK are now at record lows in many areas, which they believe is providing a certain amount of support for prices. However, as with the UK average purchase price, this does mask varying shades of regional variations, with some areas of the country anecdotally reporting busier listings in February than others.

In summary, February’s data points to the market settling into a consistent pattern rather than gearing up for a ‘Spring spike’, although clearly, as we continue to see regional divergence in terms of annualised growth, it’s possible that there will be pockets of the country that may experience a balmier outlook over the next few months than others.

Read the full National Mortgage Index report here.