Mortgages in the UK


After a decade-long boom, with prices peaking in 2007, the UK property market started to unravel in 2008 due to the credit crunch, with activity hitting record lows later that year. The banks, afraid of incurring losses, introduced big lending restrictions which led to fewer buyers being able to secure property finance. And that led to prices falling further and banks cutting back even further. First-time buyers, in particular, were prevented from getting a foothold on the property ladder due to the large deposits required.

How things can change, however. The last couple of years have seen a revival in the UK housing market, and there was a strong start to 2015 in terms of net sentiment regarding the housing market, according to research from Halifax. This has translated into an increase in transaction volumes, most likely due to the combination of improving economic figures, greater numbers of higher loan to value mortgages and extremely competitive mortgage rates.

House prices rose by 2.6 per cent in the first three months of the year, bringing the average property price to almost £193,000 says Halifax, and it expects prices to end 2015 between three and five per cent higher than they started it. Nationwide, however, has reported that UK house prices rose by only 0.1 per cent in March but that prices had fallen since the start of the year in some parts of the country. The building society says that the annual rate of growth softened for the seventh consecutive month and stands at 5.1 per cent compared with its recent peak of 11.8 per cent in June 2014.

A third of all house sales are now made to first-time buyers, according to a report from the National Association of Estate Agents (NAEA), suggesting the UK’s housing market is becoming less hostile towards those attempting to climb the first rung on the property ladder. The report says that 30 per cent of all house sales that took place in February 2015 were to first-time buyers, the highest figure since September last year – and since records began in 2009.

At the time of writing (April 2015), deals range from a 1.89 per cent deal for a residential mortgage of up to 80 per cent loan-to-value.