The FCA (Financial Conduct Authority) is planning a change of rules that could lower the housing costs of thousands of so-called “mortgage prisoners”.

It is estimated that about 140,000 homeowners are trapped on high interest-rate home loans with unregulated or inactive firms, and are unable to switch to a cheaper deal. The FCA is considering a change to its affordability checks which could therefore allow these home owners to switch to deals that are easier to pay.

Currently, many are stuck on high default rates, as a result of an FCA requirement – introduced in 2014 – for mortgage holders to meet strict affordability criteria when they apply for a new fixed deal. FCA chief executive Andrew Bailey said the planned changes would apply only to those in this situation who are not seeking to borrow more on their mortgage, but just want to get the cost down.

At the end of the day though banks and building societies would still need to agree to take on these customers.

Martin Lewis, founder of Money Saving Expert, said: “Finally, a welcome and sensible move. For over four years we’ve been saying that it’s ludicrous that people are failing affordability tests because they’re absurdly told they cannot afford a cheaper deal than the one they’re already on.”

According to Britain’s largest lender, Halifax, house prices across the UK have jumped by an average of 4% in the year to September.

Halifax stated that the average price of a house or flat in the UK had now risen to a new high of £225,109 and that the rise was fuelled by a shortage of properties for sale and growth in full-time employment.

The view of rival lender Nationwide was that prices in the year to September rose by 2%. The difference is possibly attributable to the different way in which the data is gathered and also from where it is obtained.

The 4% annual rise in house prices is calculated by comparing the three months to September with the same three months last year.

The Halifax figures are not broken down by region; other research has indicated that while house price growth is slowing in the south of England, it is rising in parts of the Midlands and the North.

Between August and September, prices rose by 0.8%, the Halifax said, compared to a monthly rise of 1.5% in the previous month.

Future Interest Rises?

Rising prices and squeezes on spending could stifle future demand, but it believed that the housing market was unlikely to be detrimentally affected by any  interest rate rise by the Bank of England,  according to Halifax.

Managing director of Halifax Community Bank, Russell Galley, said: “While the quarterly and annual rates of house price growth have improved, they are lower than at the start of the year.

“UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment. However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand.”

He also said ‘there has been recent speculation on the possibility of a rise in the Bank of England base rate. We do not anticipate this will have a significant effect on transaction volumes.”

Source, BBC.

The BCC (British Chamber of Commerce)  expects the UK economy to pass its pre recession peak in 2014. It also says that the UK’s GDP is now set to grow by 2.7% in 2014, an upgrade from a previous prediction of 2.2%.

This is all good news for the economy and so to for the housing market. Indeed, households perception of the value of their homes has risen to a five year high according to the house price sentiment index.

The RICS Residential Market Survey says  that the number of homes sold in the UK hit an almost four-year high last month as the housing market recovery continues to gather pace.

Britain’s  property sector is enjoying its best market conditions for nearly years as the housing revival gathers pace, according to a report.

Property analyst Hometrack said a further 0.4 per cent hike in house prices between July and August, together with marked improvements across all key indicators, means the sector is now in its best shape since before the financial crisis.

The market shrugged off the traditional August downturn as house prices grew at an annual pace of 1.8 per cent, marking their biggest year-on-year rise for more than three years.

The figures come amid speculation the UK may be heading for another property boom.