Paula Jones: Market news

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Fixed-rate mortgages. The appeal of these mortgages shows no sign of waning, with 52 per cent of those who signed up to a mortgage deal last month opting for a guaranteed interest rate. Mortgage brokerage John Charcol reports that this uptake is unusually high – normally only a third of borrowers opt for them. The popularity of fixed rates is further evidence that borrowers are feeling nervous in the current economic climate, particularly given that variable-rate mortgages should be the deals of choice right now – interest rates are widely expected to fall further this year.


House prices. It's official – average house prices in the UK are finally falling in real terms. But prospective first-time buyers shouldn't be rubbing their hand with glee just yet. The Halifax house price index for February reveals that average values fell by a modest 0.3 per cent from the previous month. The lender predicts that continuing low interest rates and strong employment figures will continue to support property values, and that overall prices will remain flat this year. The average house price now stands at £196,649 – which is still more than eight times the average wage, and far beyond the reach of many hopeful first-timers.

GO FIGURE... 64%

Proportion of first-time buyers who have shelved their purchasing plans. While average prices prevent many aspiring homeowners from getting on to the property ladder, the fact that prices are falling is also putting off first-time buyers. Research from Abbey claims that concern over the downturn in the market and fears over the economy have convinced two-thirds of first-time buyers to delay their purchase. At the start of the year, 14 per cent of non-homeowners were considering investing in their first home, now 64 per cent have put their plans on hold. First-time buyers in Wales and the South West are worst affected.

Paula John is editor-in-chief of Your Mortgage