Things to get tougher for London buyers

Rising interest rates in the UK have already made things difficult for those wishing to get onto the property ladder.

Prospective buyers now face more expensive fixed rate deals if they want to have stable repayments or higher repayments on a variable rate deal, which could rise further should interest rates continue to rise. According to recent reports those looking to buy in London could now be facing even tougher problems, with house prices now coming to an average of over £300,000.

Reports from the Halifax indicate that the average house price in London is now way over a quarter of a million pounds, so those wishing to purchase in and around the country's capital will have to take out a huge mortgage loan, and then deal with high interest rates when it comes to repayments. In the three months leading up to June the average house price in London went up by 4.9%.

In Northern Ireland house prices are rising at an alarming level, and in the same three month period there was a rise of 8.5% on the average house price, with a rise of nearly fifty percent for the whole year. House prices in London have now passed the inheritance tax threshold, and have also gone above the £250,000 stamp duty threshold.

One analyst from the Halifax stated: "The typical homebuyer in London and the South East, in particular, faces a rising tax burden due to the government's continuing failure to increase the inheritance tax and stamp duty thresholds in line with house price inflation."

Property buyers all over the country could face further problems in the coming months with a further interest rate rise of at least 0.25% predicted for August or September of this year, which would take the base rate to 6%.

Tom Smith
25th July 2007

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More Information:

• Choosing The Right Mortgage
  The market is flooded with different types of mortgages, but how do you know which one is right for you? The decision has to be yours, whether you take advice from an Independent Financial Advisor or do your own research.
• Don’t Forget The Extra Hidden Costs Of Getting A UK Mortgage
  For most of us, buying a new home is both one of the most exciting and stressful times of our lives. It goes without saying then that this is not a particularly good time to find out that you may be facing a bill of thousands of pounds in extra hidden costs for getting the mortgage to buy the UK property.