- Robert Gardner, Nationwide's chief economist
This year there is no as much pressure on the Bank of England concerning the housing market as it was in 2013. A set of measures aimed at cooling demand and prices in the housing market is finally working. On Thursday the Mortgage Advice Bureau said the average loan to value for buyers using the mortgage guarantee element of government initiative Help to Buy, jumped to a record 94.4% in the second quarter. At the same time, the average deposit of a buyer through its broker stood at 8,527 in June, following 8,722 and 11,438 in May and April, respectively.
Another report from the Nationwide Building Society showed that house prices rose at their slowest pace in more than a year in July. House values increased by as much as 0.1%, while on a yearly basis prices still rocketed 10.6%. It seems that the market is normalising, especially amid higher LTV mortgages. All reports are underscoring signs of a loss of momentum in the housing market, following a boom propelled by record-low interest rates and improving confidence that pushed prices to all-time highs. Nevertheless, it is still unclear whether house prices fall sharply, leaving more people at risk of falling into negative equity, which is equal the size of a mortgage. The latest developments in the housing market are putting a dilemma for officials on how to avoid an emerging bubble and do not harm consumers.
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