Halifax issues £168 boost to customers who are paying off mortgage

UK mortgage holders have seen their house price rise "modestly" with £168 added on in early 2024. A typical UK home cost £288,949 in April, compared with £288,781 in March, Halifax said in its latest House Index, released today (Tuesday May 7).

Amanda Bryden, head of mortgages, Halifax, said: "While there is always much scrutiny of monthly price changes - and a degree of volatility is to be expected given current market conditions - the reality is that average house prices have largely plateaued in the early part of 2024.

"This reflects a housing market finding its feet in an era of higher interest rates. While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability.

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"Activity and demand is improving, evidenced by greater numbers of mortgage applications so far this year, while at an industry level mortgage approvals have reached their highest point in 18 months. Our recent research also found that buyers are adjusting their expectations, with first-time buyers in particular compensating for higher borrowing costs by targeting smaller properties. We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the 'growth gap' on bigger properties that's existed for most of the last four years.

"However, we can't overlook the fact that affordability constraints are still a significant challenge, for both new buyers and those rolling off fixed-term deals. Mortgage rates have edged up again in recent weeks, primarily as a result of expectations around future Bank of England base rate changes, with markets now pricing in a slower pace of cuts.

"If, as is still expected, downward moves in bank rate come into play later this year, fixed mortgage rates should fall. Combined with the resilience displayed by the housing market over recent months, we now expect property prices to rise modestly over the course of 2024."

Following the release of the Halifax House Price Index this morning which showed that house prices grew by 0.1% in April. Kate Steere, property expert at personal finance comparison site finder.com said: "A lot of uncertainty still surrounds the UK housing market, but today’s figures, alongside the fact that mortgage approvals have been on the rise, shows that buyer demand could be strengthening.

"The Bank of England is widely predicted to cut rates in the coming months, with half of experts believing rates will be cut at the Bank’s meeting on 20 June. As a result, buyers who have so far held off, are beginning to return to the market. However, affordability issues remain, with several big lenders increasing their rates over the last week. Therefore, it’s unlikely that we’ll see UK house prices sprint away in 2024, but there are encouraging signs of recovery."