UK Nationwide House Prices Edge Higher In October

By David Robinson

     LONDON (MNI) - UK house prices edged higher in October, rising 0.2% on the

month and 2.5% on the year, up from a revised 2.3% in September, the Nationwide

House Price Index showed.

     Annual house price growth in the Nationwide series has held in a 2 to 4%

range since March. The focus now will be on what impact the expected Bank of

England rate hike this week will have on the housing market.

     Housing market activity has held fairly steady. BOE data showed mortgage

approval growth dipped to 66,232 in September, which was close to the recent

average.

     Nationwide's Chief Economist Robert Gardiner said that a 25 basis point

Bank Rate hike on Thursday should not have much impact on house prices.

     "The proportion of borrowers directly impacted by a rate rise will be

smaller than in the past, in part because the vast majority of new mortgages in

recent years were extended on fixed interest rates. The share of outstanding

mortgages on variable rates (and which are therefore likely to see an increase

in payments if the Bank Rate is increased) has fallen to a record low of around

40%, down from a peak of around 70% in 2001," he said.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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