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House prices soar as buyers race to lock in cheap mortgage deals

·3-min read
House prices mortgage deals buying property
House prices mortgage deals buying property

The race to lock in cheap mortgage deals before interest rates climb higher has sent house price growth surging to 12.4pc.

Average values jumped in April, up from 9.7pc in March, according to the Office for National Statistics.

This was the highest rate of growth recorded in at least 16 years, excluding June 2021, when house price growth hit 13.3pc as buyers raced to transact before the stamp duty holiday was tapered.

The average UK house price was £281,000 in April, which was £31,000 higher than this time last year.

In Wales and Scotland, house price growth hit 16.2pc. In England, the rate was 11.9pc, while Northern Ireland recorded 10.4pc growth.

The South West had the fastest price rises of any region in England, with growth at 14.1pc, while London recorded the slowest pace of growth at 7.4pc.

But analysts warned that these figures do not reflect the current state of the cooling market, as ONS data operates on a lag. The Bank of England has since made two further consecutive raises to the Bank Rate since the April data was collated, meaning mortgages are now significantly more expensive.

Andrew Montlake, of mortgage broker Coreco, said: “This data is not a true reflection of where the market is at right now. The era of ultra-cheap money is finished and that will soon start to feed through into house price growth.”

In the six months to May, the average rate on a two-year fixed-rate mortgage with a 25pc deposit has surged from 1.57pc to 2.63pc. Pantheon Macroeconomics forecast this will hit 3.7pc by the end of this year. It expects house price growth to plunge to 5pc over the same period.

Gabriella Dickens, of Pantheon Macroeconomics analysts, added that the data was also skewed by the 1.2pc monthly house price fall recorded in April 2021. This was because prices rose to a temporary high a month earlier in anticipation of the end of the stamp duty holiday, which was postponed at the last minute.

Monthly price growth slowed, signalling that the overall figures would soon decelerate. On a seasonally-adjusted basis, monthly house prices rose by 0.4pc in April 2022. “This was much smaller than the average 1.2pc average increase in the prior six months, suggesting that the combination of surging mortgage rates and falling disposable incomes is beginning to weigh on the market,” said Ms Dickens.

Mark Harris, of SPF Private Clients, a mortgage broker, said: “Borrowers need to move quickly to secure the best fixed rates as they are often pulled at short notice.”

Tom Bill, of Knight Frank estate agents, added that supply is rising because sellers are making a call that house prices have peaked.

“Interest rates are now above 1pc and the Bank of England has used stark language to downplay the economic outlook, which has brought more sellers forward in the belief house prices are peaking,” said Mr Bill.

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