UK Personal Finance

Halifax have raised there house price forecast for this year from 4% to 6%, even thought the interest rights have increased rapidly.

HBOS group which Halifax is part of, made this dramatic change after House Prises rose faster then the year has expected; this is due to stronger economies and shortages of new build.  Even though Halifax have decided to change there forecast Nationwide Building Society are sticking to there guns at between 5% and 8%, this is despite the rise in the property market in the past 6 months.  Halifax have released that prices are now easing.  Martin Ellis explains an increase in mortgage rates have had a large effect on housing affordability and will increasingly bite over the next 6 months.  Nationwide Building Society agrees with this statement.  Fionnuala Earley explains that they believe that house price growth will fall from 11% to between 5% and 8%.

The main borrowing cost has been raised 5 times in the past year by The Bank of England to 5.75%.  The effects of higher rates are filtering through slowly.  In June a new record was reached by the amount of Mortgage Lending according to CML.  Despite 5 increases in the interest rates, the total lending rose by 9% to £34.2bn in May.  CML explained as this is the peak time for house buying the rise was seasonal.  CML added fewer people would move house, while more would re-mortgage, as borrowers begin to fix there mortgage rates.