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Your April market update

Why is the house market still going up? And what do changing mortgage rates mean for you? We've got it all in your April market update.

Home valuation

The property market is making headlines – but when we constantly hear about house prices reaching record highs and with mortgage rates rising, it can be difficult to figure out what all this means for you. That’s why we’ve put together this monthly update to look behind the headlines and see what’s really going on. 

This April, we take our monthly housing market temperature check, and it looks like things are heating up – again. We also take a look at what the rising mortgage rates mean for those who are thinking of borrowing or remortgaging. There’s lots to look at this April, so let’s get started. 

Welcome to your April market update. 

“Frenzy” as the spring market booms

In an unexpected turn, the price of property coming onto the market has reached a new high this month – again. Why is it unexpected? Well, with increasingly high inflation and the cost-of-living crisis deepening, it’s seemed like a housing market cool-down has been on the cards for months now. But, despite experts’ predictions, April has been another bumper month for the housing market. 

According to property search website Rightmove, asking prices rose by 1.6% this month and, although this is slightly down from March’s 1.7% rise, it’s still unexpected. Rightmove’s survey has also shown that at least half of all houses on the market are selling at or above their asking price, which tells us that demand is as high as ever. 

Over the past two years, the market has been moving from strength to strength – and this April is no exception. Halifax house price index has found that the average property price in the UK has risen by 18.2% since the beginning of the pandemic. That’s a whopping £43,577 extra

But why are house prices continuing to rise? It looks like high demand and limited supply are still driving prices up, in spite of rising uncertainty and cost of living. As Tim Bannister, Rightmove’s managing director, commented:

“While growing affordability constraints mean that this momentum is not sustainable for the longer term, the high demand from a large number of buyers chasing too few properties for sale has led to a spring price frenzy.” 

It looks like first-time buyers are facing the brunt of rising prices, as it becomes increasingly difficult to make that first step onto the housing ladder. Those looking to move could also be affected as the price gap between properties on the ladder gets wider. 

Interest rates have been pushed up in response to rising inflation, while at the same time it looks like some lenders are predicting that the economy could start to slow down sharply in the future."

Fixed-term mortgages go up

Fixed-term mortgage rates have also come under the spotlight this month. According to the Guardian, many banks have been pulling their mortgage deals or repricing them at a higher rate this April – in an attempt to deal with an increasingly volatile economy.

With inflation soaring to 7% in March, the Bank of England has started to feel the pressure. Interest rates have been pushed up in response to rising inflation, while at the same time it looks like some lenders are predicting that the economy could start to slow down sharply in the future. If this did happen, then banks would likely have to stop increasing interest rates or even cut them, leading to more uncertainty. 

But what does this mean for borrowers? Well, those of us looking for a fixed-rate mortgage could face a conundrum: given all this economic instability, is it better to go for a longer or shorter fixed-term mortgage?

Those who opt for a longer-term fixed-rate (which could be anything from 5-10 years) might find that they have protected themselves against any fluctuations in the economy later down the line. On the other hand, those who sign up for a shorter-term deal may find lower rates and the freedom to find a better loan if rates were to drop in a few years’ time. But this tactic could also backfire – particularly if prices (or rates) were to go up. 

So, the question is: is it better to choose long-term security or risk rising rates for short-term freedom?

Whatever you decide, one thing seems clear – mortgage rates are on the rise so it’s best to move fast. Financial data provider Moneyfacts have shown that the average two-year fixed-rate mortgage on sale this month was calculated at 2.86%, up from 2.65% in March, this is the highest price since 2015. Eleanor Williams at Moneyfacts has advised borrowers: “Those hoping to secure a new mortgage may wish to act sooner rather than later.” 

So, there you have it. This month has brought a mixed bag of soaring house prices and rising mortgage rates – both are presenting challenges for first-time buyers and those looking to get a leg up onto the housing ladder. With the continued squeeze on household incomes and rising inflation, things with the housing market are definitely feeling uncertain this month. While we don’t have a crystal ball, it looks like whatever happens the next few months will be interesting. One thing we can tell you is that we’ll be here to update on all the twists and turns with the market and, most importantly, what they mean for you. Watch this space.