According to the Nationwide the price of a typical house rose for the fourth consecutive month in August, increasing by 1.6% on a seasonally adjusted basis.

The 3 month on 3 month rate of change – generally a smoother indicator of the near term trend – rose from 2.7% in July to 3.3% in August, the highest level since February 2007. At £160,224, the average price of a typical UK property is still slightly lower than 12 months ago. However, the annual rate of change rose further in August, from -6.2% to -2.7%. Over the first eight months of 2009, the seasonally adjusted index of house prices has risen by 3.2%, though relative to the October 2007 peak it is down by 14.4%.

Commenting on the figures Martin Gahbauer, Nationwide’s Chief Economist, said: “The exceptionally low level of interest rates offers some explanation for why house prices have not repeated the very sharp falls of 2008. There are two main channels through which the low level of interest rates has impacted the housing market. First, mortgage payments for existing homeowners – especially those with tracker or standard variable rate loans – have been reduced substantially.

Before the MPC began cutting rates, the average interest and principal payment per mortgage holder represented about 38% of the average post-tax labour income. Following the steep cuts in base rate, this has fallen to just 28% of post-tax income, despite historically high levels of outstanding mortgage debt. The fall in debt servicing costs has meant that fewer homeowners are under immediate financial pressure to sell than might have been expected in a recessionary economic background with rising unemployment. Partly as a result, fewer second-hand properties have come onto the market than is normally the case in recessions, which has contributed to moving the balance of supply and demand more in favour of sellers over the course of 2009.

“If the various monetary and fiscal stimulus measures that have been introduced over the last year are successful in reviving growth on a sustained basis, then inflationary pressures will eventually re-emerge and necessitate an increase in interest rates to more normal levels. When this happens, it will probably have the effect of releasing additional supply back onto the market and dampening the recent rise in buyer interest. Under such conditions, the strong price increases of recent months would become difficult to sustain. At the moment, a rise in interest rates is probably still some way off. However, the eventual exit from exceptionally loose monetary policy could make the recovery in the housing market bumpier than some might expect after the last few months of price increases.”

However, activity is still subdued on any historic comparison; this is the lowest July lending figure since 2001 and £11 billion lower than the July average over the previous seven years of £27 billion. 

Advances picked up in June and July, the increase is likely to have been driven mainly by a rise in house purchase activity, rather than remortgaging activity, as low reversion rates continue to limit the attraction of refinancing.

CML economist Paul Samter said: “Most of the indices point to house prices rising modestly over the summer months. The CML’s July gross lending estimate of £16 billion is the highest level in nine months and consistent with the rise in house purchase approvals.

“But the bounce-back in activity from the extreme weakness around the turn of the year, coinciding with a seasonal bounce, is limited in how far it can go against the current back-drop. We expect improved sentiment to support the market, but a further significant pick-up is unlikely with so many obstacles in place. As a result, we anticipate some seasonal slowing in lending volumes and housing transactions over the latter part of the year and the picture of a slow but more stable market to emerge.”

Andrew Montlake, director, independent mortgage broker Coreco, commented:- “These latest figures support the general feeling that some parts of the lending market are slowly easing, particularly in the large mortgage loan sector. This sector of the market does tend to start moving first before slowly trickling down to the rest of the market as lenders are happier to lend to what they see as “quality” applicants with higher incomes and sizeable deposits. However, there is still a big squeeze in terms of availability and competitive mortgage rates in the wider market despite buyer demand being strong.

“Recent falls in LIBOR and SWAP rates have not been passed onto consumers, and although it is not a given that if LIBOR falls then lenders interest rates must fall, lenders still appear to be more focused on balance sheet repair and profit building than actually lending.”

The Consumer Prices Index annual inflation report for July remains the same as June at 1.8 per cent.

 
Food and non-alcoholic beverages gave the largest downward pressure affecting the change in the CPI annual rate. This was principally due to meat and vegetable prices falling this year but rising a year ago across a range of products. There was a small downward effect from bread and cereals, where prices rose by less than a year ago.

There was also a large downward pressure from restaurants and hotels where prices rose by less than a year ago. This downward effect came from restaurants and cafes, particularly relating to take-away items, and accommodation services, where prices were little changed this year but rose a year ago.

The only large upward pressure affecting the change in the CPI annual rate came from recreation and culture. The effect came mainly from games, toys and hobbies and, to a lesser extent, from recording media, with prices of computer games and pre-recorded DVDs rising this year but falling a year ago. Partially offsetting these effects was a small downward contribution from photographic equipment where prices fell by more than a year ago.

RPI annual inflation was – 1.4 per cent in July, that is a fall of 1.4 per cent on the year, compared with -1.6 per cent in June. The main factors affecting the CPI also affected the RPI. Additionally, there was an upward pressure from housing with the largest effect coming from house depreciation. Depreciation is excluded from the CPI.

The amount of borrowers opting for fixed rate mortgages has hit record levels, with the products making up 70% of cases submitted by mortgage brokers in the second quarter of the year.

According to the latest Paragon Financial Advisor Confidence Tracker research, this is the highest level since the survey was launched in 1996. Fixed rate mortgages accounted for 55% in the first quarter of 2009 and 41% in the final quarter of 2008.

The proportion of Bank of England base rate tracker mortgages fell over the same period, from 41% to 26% of cases introduced between the first and second quarters of the year.

Paragon said this trend was as a result of lenders withdrawing or re-pricing tracker mortgages as the Bank of England slashed interest rates between December 2008 and March 2009.

Of the fixed rate mortgages, two-year terms remained the most popular, at 40%, three-year fixes 32%, five-year 24%, 10-year 2.5%. and one-year 1.5%.

John Heron, Paragon Mortgages managing director, said: “With borrowers unsure about the next move for interest rates, they appear to have been opting for the security of fixed rate deals. It is likely that the next move for base rates will be upwards, but it is unclear when that will be.

Most people insure their homes, their pets and even their holidays but hardly anyboby insures their most important asset – their INCOME.

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With over 2.6 million people in the UK claiming benefit from the state for incapacity (source DWP May 2009), the likelihood of this happening to you may be greater than you think.

Income protection can ensure financial stability for you, your family and even your pets.

The policy pays a monthly tax-free income until you recover – right up to retirement date if needs be and the payout can be level or set to rise with inflation.

The maximum cover you can have is between 50% to 65% of your gross income depending on which company provides the cover. The monthly benefit is paid tax-free and along with any state benefits you maybe entitled to, it should mean that you can maintain a similar level of take home pay that you currently have.

Some employers may provide sick pay for a few months and with the flexibility of Income Protection plans, the cover can start when your employer stops paying you. This provides you with the security of knowing you will still have money coming in every month to pay all the bills regardless of how long it takes to recover from your illness. The claim will be paid either until you are well enough to go back to work, or until your selected retirement age.

Everyone should have this cover
The State simply does not provide enough. Being unable to work could have serious consequences for your financial security, and therefore Income Protection is one of the most important insurances and should be a priority.

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According to the latest Halifax House Price Index house prices rose by 1.1 % in July, and although they are still 12.1 per cent down on the same time last year, this is the second price rise in three months and the third this year.

Comparing the last three months with the previous three months house prices were 0.8% higher, and this slight increase was the first rise on a quarterly basis since October 2007.
The Halifax index found that despite the slight monthly increase last month, house prices in July were still 12.1 per cent lower on an annual basis.

Signs of a slight improvement in the market have been supported by Halifax’s house price to earnings ratio – a key affordability measure – which has declined from a peak of 5.84 in July 2007 to an estimated 4.36 in July 2009. The long-term average is 4.0.

The news comes as recent Bank of England figures showed that the number of mortgages approved to finance house purchase increased by 22 per cent between the first and second quarters of 2009.
In addition, mortgage approvals increased for the fifth successive month in June and were 35 per cent higher than in the same month in 2008. They were nonetheless still 58 per cent lower than in June 2007.

Also, demand for homes has risen, albeit from a very low base, since the start of the year, driven by improvements in affordability and low interest rates. Higher demand has combined with low levels of property available for sale to boost sales activity from exceptionally low levels and support prices over the past few months.

1 Stop Financial Services was proud to be assossiated with this years Pembrokeshire Charity Bike Ride.

Over £8,500 was raised by over 300 cyclists that turned out on Sunday 2nd August for this years ride.

1 Stop will continue to support this event in future years as part of its commuinity fund raising programme.

1 STOP Financial Services are proud to be sponsoring the Pembrokeshire Bike Ride again this year.

The routes this year will be a 15 mile route for families and novices from Haverfordwest Rugby club down along the Brunel Cycle Path to Neyland Marina. Riders go towards the Mc Donalds Roundabout and head for the college joining the cycle path to Tiers Cross, through Johnston and making their way to Neyland Marina …. then after a well deserved refreshment turn around and head back on the same route back the rugby club.

The more challenging 34 mile route, for the more experienced rider (or those that love a challenge!) will leave from Haverfordwest Rugby club and head towards Camrose, Hayscatle across to Penycwm, Newgale, Broad Haven and back to Haverfordwest Rugby club.

The 1st Pembrokeshire charity ride was held in 2002. It was a great success and from then has grown to a massive fund raising event put together by 8 local cycling enthusiasts. Over £60,000 has already been given to local charities since the bike ride started.

Tim Hughes, a founder member of the Pembrokeshire Bike Ride and a partner of 1 STOP Financial Services, said “we are delighted to be able to support more local charities this year, they are Pembrokeshire Counselling Service, HOPE Multiple Sclerosis Therapy Centre and ‘The Carreg Pink Ribbon Cancer Charity Fund’ .

The Pembrokeshire Bike Ride will be on Sunday 2nd August 2009, leaving the Haverfordwest Rugby club between 10:00am and 11:00am.