Rising house prices spark interest in affordability – Firth

Rising house prices spark interest in affordability – Firth


Average house prices have continued spiking in 2022 and the trend doesn’t look to be going anywhere any time soon.  

The average advertised property has risen by £40,000 since pandemic and asking prices for homes coming on to the market in Britain rose by a record 2.3 per cent in February, according to figures from Rightmove.  

Brokers’ searches reflected this trend and in addition employment was also an area of interest as brokers appear to be working with clients that have recently started a role.  


Older borrowers on the market 

The residential market was dominated by a few themes in January. Most were connected to rising house prices in some capacity. 

Age is again an area that is of interest to brokers. ‘Maximum age at end of term’ has been the most-searched criteria for nine months in a row. While the searches are not all connected to house prices, the 10.8 per cent increase in 2021 will have resulted in some stretching mortgage terms beyond 30 years.  

Maximum age is even of interest to brokers working with first-time buyers. Taking a typical first-time buyer, who on average will be around 30, with the increased asking prices, borrowers are having to stretch terms to 30 or 35 years to make the monthly mortgage payments affordable.  

Also contributing may be the increasing number of separations during the pandemic. Leading British law firm Stewarts logged a 122 per cent increase in divorce enquiries between July and October 2020, compared with the same period in 2019. 

Lockdown proved to be a perfect storm for some couples and has acted as catalyst for separations. As a result, older borrowers may be back on the market and looking for mortgages.  


Affordability a key concern 

Alongside stretching the length of the mortgage, house prices are impacting affordability. Income multiples are becoming a key area of interest for brokers and have been amongst the five most-searched terms for the past 13 months.  

With the average wage increasing at a slower rate than house prices, this trend looks set to stay for the long term. Some lenders are now offering six or seven times income for lower earners and key workers and these options may become more popular as house prices continue to spike.   


Jobs carousel in full swing 

The latest Office for National Statistics figures show there were almost 200,000 more people on payrolls in December and it appears some of these are new starters as ‘time in employment’ was the third most-searched term in January.  

As confidence has built in the economy, employees have felt more comfortable changing jobs. Despite the raft of new starters, there are still vacancies across industries so this trend looks set to continue. 

The year has started with a raft of criteria changes from lenders, and amongst the changes, borrowers’ needs have also shifted.  

These needs will keep evolving as the year progresses and at Knowledge Bank we’ll continue to monitor these trends and informing brokers.