How difficult is it to get a mortgage in 2015?
Have the new mortgage restrictions had any effect on rising UK house prices?
UK house prices rise since the global financial crash
House prices in the UK rose by 9.8% on average in the year to December 2014. This represents considerable capital appreciation and a very good return for investors, especially in comparison with the low interest rate achievable on savings, or the higher risks involved in buying and selling shares in a rising but still very volatile stock market.
However, significant house price rises are not necessarily good news – house price inflation in 2014 was the highest since 2007 and, once adjusted for inflation, 2014 prices generally surpassed the previous 2007/8 peak. There are several house price indices that can produce different results and of course there are major regional differences within the UK which widely distort conclusions drawn from nationwide averages.
Every month studies and surveys are published with the most recent suggesting a slight
slow in the rate of price rises, but clearly there is widespread concern that a new housing price bubble, within the context of a still weak global economy, could trigger another financial crisis with parallels to the unprecedented economic collapse of 7 years ago. One of the characteristics of the 2007/8 situation was how easy it was to obtain mortgages and other credit, as well as the wide and confusing variety of mortgage products which were then available.
In an attempt to avoid a repetition of the financial crisis there are now various restrictions on lenders and the mortgage market which are designed to take some of the heat out of the booming property market without affecting growth and housing supply too negatively. Is this strategy of mortgage restrictions working effectively or is it too blunt an instrument which simply keeps first time buyers out of the market while prices continue to rise anyway?
Average house prices for the last eight yearsSource: www.propertycrowd.com