Asking Prices Hit Record High
The website reported evidence of a "broader-based recovery", with prices up annually in all regions across England and Wales - the first time this has happened in nearly three years.
New sellers are asking around 4.8%more for their homes than they were a year ago. In London asking prices have soared by 12% annually to reach £515,379 on average.
The West Midlands and the North saw the smallest year-on-year rises, of 1% and 1.2% respectively. Meanwhile, asking prices are up 2.4% year-on-year in Wales. The latest study will fuel concerns that Government efforts to kick-start the housing market could lead to a "property bubble", with mortgage borrowers trying to stretch their finances too far. Sellers' asking prices have risen every month this year. Rightmove, whose records go back to 2002, said it is doubling its forecast for house price increases over this year from 2% to 4%. Several other experts have also revised their predictions upwards amid signs that Government schemes to boost market activity are having an impact.
It expects London to continue to out-perform the rest of the country and the South East to maintain its "strong momentum", driven by an on-going shortage of homes for sale which has the effect of strengthening competition among buyers. However, northern regions may struggle to maintain increases over the course of the year, it said.
The Council of Mortgage Lenders (CML) reported last week that first-time buyer numbers have reached their highest in five-and-a-half years and a recent Halifax study found that one in four people expect house prices to lift by at least 5% over the next year. Rightmove's own consumer confidence survey found that almost two-thirds of people expect prices to be higher in a year's time, which is double the 31% who said this a year ago.
Miles Shipside, director of Rightmove, said: "Consumer confidence is key to the housing market and on this front there has finally been a year of minimal bad news, with a reasonable amount of good, after four years of pretty consistent doom and gloom. "Confidence and the ability to take on a long-term mortgage commitment give more buyers the spur to enter the market or trade up."
Mortgage availability has sharply increased since the Government launched the Funding for Lending scheme last August This gives lenders access to cheap finance to help borrowers. Concerns have been raised about the potential impact on house prices of the new Help to Buy scheme, which from next year will enable lenders to use Government-backed guarantees to offer £130 billion of low-deposit mortgages on new and existing properties.
First 0% Mortgage Is Launched
The price war in the mortgage market has stepped up a pace, with Leeds Building Society becoming the first lender to offer a 0% mortgage deal. Such "introductory" interest-free deals have become common place in the credit card market for years. But mortgage lenders appear to be following suit, with banks and building societies benefiting from record low interest rates, and cheap Government funding - designed to stimulate the housing market. Leeds Building Society has launched two new fixed-rate mortgage deals, both of which offer homeowners the option of paying no interest at all for the first six months. However, borrowers should tread carefully. Although this will reduce mortgage payments initially they will then pay a slightly higher rate for the remainder of the term. The exact rate will depend on how long you take the interest-free deal for, and the size of your deposit. Customers who have just a 10% deposit and who want to take the full six-month interest-free option, will pay a rate of 5.22% on the three-year deal for the remainder of the term. A spokesman for the Leeds Building Society said customers would not penalised for taking up the interest-free offer and would pay the same interest in total over the term. Rates start from 3.79% for the three years deal and 4.23% for the five-year deal, though both assume homeowners can put down a 20% deposit. Both mortgages have just a small arrangement fee of £199. Borrowers can repay up to 10% of their capital each year without penalty.