According to Halifax, UK house prices rose by 1.2% in October compared to September, however values had fallen 1.8% compared to this time last year.
Despite the rise in house prices month on month the UK housing market did show some signs of improvement in October, according to the recent surveyor’s poll. The Rics or Royal Institution of Chartered Surveyors stated that sales and new buyer inquiries were up in October compared to the activity in September.
Ian Perry, the housing spokesman for the Royal Institution of Chartered Surveyors said, “It is encouraging that activity levels appear to have edged upwards over the past month. Indeed, chartered surveyors are generally upbeat about the near-term prospects for transactions."
Possible causes
So what has caused the recent boost in the housing market? One theory behind the recent rise in house sales and enquiries is that sellers are willing to take lower offers to secure a quick sale. Others believe it’s due to better mortgage products on the market and the rise in offset mortgages.
Offset mortgages are mortgages that allow you to reduce the amount of interest you pay on your property by using a linked savings account.
Here’s how it works, if you have a mortgage of £120,000, and you have £50,000 in a savings account linked to your mortgage, then you will only pay interest on £70,000 of your mortgage.
The main advantage of an offset mortgage is that you will pay off your mortgage faster due to less interest payments, and depending on the amount of money you have saved up you may pay off your home loan with years to spare.
The other advantage of an offset mortgage is that if you’re a higher rate tax payer, then you don’t incur any tax on any linked savings interest you earn, as it’s being used to offset against your mortgage.
When is the right time to buy?
The right time to buy always depends on your personal circumstances and the current state of the UK economy. With house prices still low compared to this time last year as mentioned earlier, if you do have the funds available then it is a good time to buy.
Before you decide if it’s the right time to buy for you, you need to find out how much you can afford to spend and how much your repayments will be on the mortgage product your choose. There’s a mortgage calculator at MoneySupermarket.com that will do just that.