The Week Unzipped: House prices continue to climb – but market isn't home and dry yet

THE Bank of England has held the base rate at the record low of 0.5 per cent for the 13th consecutive month, as the Halifax reported that house prices grew by 1.1 per cent in March.

Annual house price inflation is now up to 5.2 per cent from 4.5 per cent last month. This is the highest since December 2007. The average price is now 9.1 per cent above the low point reached last April.

However, Halifax warns there was an underlying slowdown in prices in recent months. Values were 0.6 per cent higher in the first three months of 2010 than in the final quarter of 2009. However, this rise is noticeably smaller than the 3.6 per cent increase between the third and fourth quarters of 2009.

These figures contrast with those published by Nationwide which report a 0.7 per cent rise in March pushing prices 9 per cent higher than those seen a year ago.

Howard Archer, chief UK economist at IHS Global Insight, commented: "The Halifax data reinforces our suspicion that house prices will be erratic in 2010, and we still suspect that prices may very well be no better than flat over the year."

Service costs

BRITS' savings are at their lowest levels in 40 years, according to the Office for National Statistics, with households putting away just 1.7 per cent of their income, the lowest recorded since 1970, and well below the 7.6 per cent average over the past 40 years.

The survey revealed that the biggest area of spending is housing and domestic bills, representing 21 per cent of outgoings, compared with 15 per cent 40 years ago. In 1970, people spent the highest proportion of their income, 21 per cent, on food and non-alcoholic drinks. Today, this accounts for just 9 per cent.

The ONS says that rather than imply a fall in the purchase of food and non-alcoholic drinks, the figures show that expenditure on other goods and services has risen more rapidly.

Other declines in spending since 1970 include clothing and footwear, alcoholic drinks and tobacco.

In the past ten years, the proportion of outgoings spent on services exceeded that for goods.

Double rewards

BARCLAYCARD is offering double reward money on cardholder purchases through its Barclaycard Freedom scheme until 17 May. During the period, customers can earn up to 2 per cent on transactions with more than 30,000 participating retailers and brands including npower, Shell and Pizza Express.

No-penalty pay-off

COVENTRY has launched two flexible, fixed-rate mortgages which will allow borrowers to overpay without penalty.

The new products are a two-year fix requiring a 35 per cent deposit at 3.99 per cent and a three-year deal with a 25 per cent deposit at 4.49 per cent.

Elsewhere, Leeds Building Society has added to its five-year, fixed-rate mortgage range with a product charging 4.85 per cent with a 20 per cent deposit. Borrowers can repay 10 per cent capital each year without penalty.

The society is also launching a range of 'fee assisted' products which offer free standard valuations and free in-house legal services for standard re-mortgages, together with reduced fees. These start at 5.2 per cent with a 40 per cent deposit.