Interest rate rise of 1% would cost average UK homeowner £930 a year

mortgage set to rise

A Bank of England rate change would add £10bn to UK mortgage bill, Savills says.

A 1% rise in interest rates would add around £10bn to the UK’s mortgage bill, according to analysis from estate agent Savills.

The increase would equate to adding £930 a year to the cost of servicing the average mortgage. Borrowers on variable rate deals influenced by movements in the Bank of England base rate would be the first to feel the pain, putting the annual mortgage bill up by £4.3bn immediately, Savills said.

The 59% of borrowers on fixed-rate deals would feel the impact later, when their existing mortgage deals come to an end. Of the total increase, Savills calculates that buy-to-let landlords would pay an additional £2.4bn, with other home owners paying £7.8bn more.

“This would bring an end to the historically low mortgage costs that have boosted housing affordability and limit the buying power of those needing a mortgage, and underscores our forecasts for more subdued house price growth over the next five years,” said Lucian Cook, head of residential research at Savills.

Savills forecasts that average UK house price growth will stand at 14% in total over the next five years.
Borrowers are bracing themselves for further possible interest hikes following the increase last year from 0.25% to 0.5%. Earlier this month, the Bank of England governor, Mark Carney, readied borrowers for further and faster interest rate hikes, although he also stressed that rises would be limited and gradual.

With the possibility of further base rate rises on the horizon, homeowners looking to lock into a long-term deal to get some certainty over their repayments may also find the rates on offer have edged up. reported last week that average rates on 10-year fixed-rate mortgages on the market have started to edge up from an all-time low. Savills said the total number of outstanding mortgages has fallen by over half a million over the past 10 years, as existing homeowners clear their mortgage debts at the same time as younger households struggle to buy homes.

Savills based its research on figures from the Bank of England and UK Finance, the trade body for British banks.

NI House Prices Increase By 4.3% On Previous Year

AVERAGE house prices across Northern Ireland increased by 4.3% in 2017, compared to the previous year.
The house price index, calculated by Land and Property Services, measures change in the price of residential property sold in Northern Ireland. It indicated a 1% increase in the last quarter of 2017, with the most significant rises in Fermanagh, Omagh and Mid Ulster.

The house price index is now 17.6% higher than Q1 2015. As house prices are considered a measure of a region’s economic prosperity, this is positive news for the province.

Eight out of the 11 NI council districts saw an increase in house prices. Mid Ulster saw the largest quarterly increase of 5.9%. Derry City and Strabane saw the largest annual increase of 8.8%.

The average house price in Northern Ireland stands at £130,482, increasing by 4.3% (from £125,059) on the same quarter in 2016. House prices in Northern Ireland now range from a low of £117,055 in the Armagh City, Banbridge and Craigavon Area, to a high of £152,427 in Lisburn and Castlereagh.

5,501 residential properties were sold during the last quarter of 2017 – this brings the total number of properties sold during the year to 22,809. This is a decrease of 0.9% on 2016.

With regards to property types in Northern Ireland, apartments saw the biggest quarterly increase in price by 2.7%. Meanwhile terrace houses had the biggest annual increase of 4.9% on the previous 12 months. Detached houses remain the most expensive property type at a standardised price of £195,170, with apartments and terrace houses at £105,875 and £90,670, respectively.

Across the UK, house prices grew more slowly in 2017 compared to 2016. The annual growth for 2017 was 4.8%, compared to 7% in the 12 months prior. 2017 represents the slowest growth since 2013.

The House Price Index is a quarterly report calculated by Land and Property Services in conjunction with The Office of National Statistics. The statistics are based on property sales recorded by HMRC.

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‘Buoyant’ NI housing market outperforming UK’s at start of 2018

buyer enquiries rising

THE Northern Ireland housing market has started 2018 in a positive manner, with prices increasing and demand strong, according to a new industry survey.

The latest RICS (Royal Institution of Chartered Surveyors) and Ulster Bank Residential Market Survey for January has revealed that surveyors in the north continue to display greater positivity regarding the housing market than in the UK as a whole, but a lack of supply in the local market remains a cause for concern.

In Northern Ireland new buyer enquiries continued to increase firmly, according to the survey, whilst newly agreed sales edged up. Expectations for sales and prices also remain in positive territory, with only the north west of England displaying a higher reading in terms of the latter.

The positive picture is in direct contrast to the UK-wide picture, with new buyer enquiries, instructions and sales all continuing to drift lower while the three-month expectations point to a flat picture in the near future.

Concerns in relation to supply in the Northern Ireland market remain though. Whilst new buyer enquiries are reported to be rising firmly, the data for instructions to sell suggests that few properties are coming onto the market- pointing to a gap between supply and demand.

Respondents point to this shortage of supply as a concern in the months ahead and also indicated that higher costs of building materials will act to push up the price of new build homes.

RICS residential property spokesman, Samuel Dickey said the picture presented of the market in Northern Ireland is “considerably more positive” than in some other UK regions, with prices reported to be rising and a growing number of potential new buyers active in the market.

“Surveyors are also relatively positive about the outlook, but there are a number of factors that could influence these outcomes including a rise in interest rates, a shortage of supply and economic wider conditions. The increased cost of building materials combined with demand for higher quality homes will also act to make new-build properties more expensive,” he said.

Sean Murphy, managing director for personal banking at Ulster Bank, said it is no surprise the local housing market remains “relatively buoyant”.

“There’s no doubt that there are economic challenges ahead for 2018, including rising inflation, but the evidence suggests that people continue to want to own their own home and that the outlook for the market among surveyors remains quite upbeat.”

Reflecting on the survey findings, Co-Ownership chief executive, Mark Graham added:

“With more interest from new buyers, yet fewer instructions to sell, housing supply and demand remains an issue for the local housing market. Northern Ireland has had a legacy of underbuilding for over a decade. The reality is that we are still not building anywhere near enough homes to meet demand. Indeed, it is estimated that we need to be building something in the region of an additional 2,000 homes per annum in Northern Ireland, particularly in today’s market when the buyers’ preference is increasingly for new-build properties.”

“Not only do we need to see more new housing developments, but we need new stock of affordable houses to support these buyers,” he said.