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National Mortgage Index December 2017

Market steady despite interest rate rise and Autumn Budget

In a month bookended by the first interest rate rise in nine years, and a windfall for first time buyers with an exemption on Stamp Duty and Land Tax (SDLT) introduced in Chancellor Hammond’s maiden Autumn Budget, the UK housing market proved reasonably resilient.

Overall, the data for November saw prices hold firm in many areas in terms of purchase prices, and although growth was limited, given that we would expect to see a slight cool-down in prices as we head towards the holidays as is seasonally the norm, the fact that most areas saw a small increase in prices suggests that consumer confidence remained undimmed by the 25 bps rise. With this in mind, we observed slight movements on key indicators, including:

  • Average purchase price in November 17 rose slightly to £248,202 from £246,782, a 0.6% month on month increase.
  • Average remortgage loan size decreased in November 17 to £174,402 from £176,186 in October 17, a 1% fall on the previous month.
  • Average First Time Buyer purchase price dropped very slightly in November 17 to £192,464 a fall of 0.4% on the previous month (£192,464).

Mortgage Advice Bureau data is based upon mortgage applications, therefore this provides a reliable indicator in terms of consumer activity.

The story of 2017 has been a lack of available properties for sale in many areas, which has created upwards pressure on prices that has been evident in most regions. Of course, this is a double-edged sword; great news for the homeowner who is sat on an appreciating asset, but very difficult for those who want to get on or move up the property ladder, particularly given that wage growth hasn’t kept in line with property values. In contrast we’ve seen that prices and activity in areas such as London and the South East have cooled in the last few months, which hopefully will assist those who wish to purchase around the capital. However, where property affordability and perhaps a better lifestyle conjuncts with improved transport links, such as the West Midlands and East of England, and buyers can get more for their money yet still reasonably commute into the City, we’re seeing a pattern of these areas still experiencing price increases, a picture which is quite likely to continue for some time to come. According to HMRC’s figures, we’ve seen a steady number of transactions over 100,000 every month this year, which does underscore continued demand.

In terms of the market going forward, it’s still too early to tell if the recent introduction of the SDLT exemption for First Time Buyers will make as much of an impact as the Government hopes, or if any saving will be mitigated by the price of properties coming to market that would fall within the exemption amounts being marketed at a premium due to a rise in demand, which has also been predicted by some in the industry. What is safe to say is that, in a year where we saw many potentially disruptive factors such as Article 50 being triggered, coupled with an ongoing economic backdrop which at best could have been described as cautious, instead of bringing the UK property market to its knees, it’s remained consistent and reasonably steady in real terms, which will provide us with a stable start to 2018.

Read the full report here. 

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