House prices rose just 1.1% on an annual basis in January, shows fresh data from Nationwide.
And on a monthly basis, house prices dipped by 0.6% – making for the fifth monthly drop in a row.
This means that, according to the lender, the latest average house price is now £258,297.
Nationwide chief economist Robert Gardner says that one of the bigger issues now and in the near term is affordability.
He explains: “High house prices relative to earnings mean deposit requirements remain a major challenge. Moreover, the Help to Buy Equity Loan scheme that helped those with a smaller deposit buy a new build property is due to end in March.
“However,” he says, “the government’s mortgage guarantee scheme, which helps to secure the availability and lower the cost of higher LTV mortgages, has been extended until the end of 2023.”
Gardner adds that all regions across the UK have seen a “deterioration” in affordability compared to 2021, “with the cost of servicing the typical mortgage as a share of take-home pay now at or above the long-run average in all regions.
“Pressure remain particularly acute in London and the south of England, where mortgage servicing costs have risen sharply compared with a year ago. Scotland and the North continue to be the most affordable regions but, even there, mortgage payments as a share of take-home pay are at their highest level for over a decade,” he says.
Meanwhile, SPF Private Clients chief executive Mark Harris offers a positive opinion, saying: ’The swap rate volatility sparked by the mini-Budget has largely dissipated and fixed-rate mortgage pricing continues to fall. Five-year fixes are now available for not much more than 4 per cent, with Virgin Money launching a five-year fix of 4.17% this week.
“While the markets expect a 50 basis point rise in interest rates at February’s meeting, fixed-rate mortgages are set to continue to fall, while those on variable rates will see an uptick in their monthly repayments.”
Yesterday, 31 January, the Bank of England released figures showing that the number of mortgage approvals granted fell from 46,186 in November 2022 to 35,612 in the following month.
