UK House prices fall by 0.7% in October 2010

Fall in UK House Prices

House prices fell by 0.7% in October according to the Nationwide, the UK’s largest Building Society.  The three-month rate of decline also fell to -1.5%, from -1.0% in September.

The annual rate of change in house prices now stands at 1.4% and the Nationwide commented that, “if the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0% and -1% by the end of 2010. This would compare to a rate of +5.9% at the end of 2009.”

There were however a few encouraging words from the Nationwide’s chief economist Martin Gahbauer on the potential impact on the housing market of further quantitative easing (QE) measures by the Bank of England.

In its October meeting, the Bank’s Monetary Policy Committee discussed whether or not it should initiate a second round of quantitative easing to help boost the UK’s economy.  Mr Gahbauer said that further quantitative easing (essentially pumping new money into the economy by buying up assets such as Government and corporate bonds) could improve the supply and cost of mortgages available to borrowers and help support the housing market.

In terms of the cost of mortgages, QE can help by lowering the cost of government borrowing.  He explains, “Since the cost of fixed rate mortgages is closely linked to the interest rates on government bonds, the policy would contribute to lowering the cost of borrowing for homebuyers taking out new mortgages.”

The cost of fixed rate mortgages has been gradually coming down in recent months, which has helped both home buyers and people looking to remortgage to a new deal.

If you’re looking to take advantage of the low mortgage rates on offer at the moment, have a look at our latest best buy deals.  If you’re remortgaging, you can also try our 1 minute mortgage check to see if we could save you money.

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