Nationwide’s House Price Index rose by 1.2% year on year in February, breaking a 12-month streak of declines while smashing market expectations of a 0.7% increase.
Source: tradingeconomics.com
The news comes a day after data from Zoopla showed the number of mortgages agreed had increased by 15% across the UK in January.
It suggests that the darkest days of the cost-of-living squeeze may be over, with prospective homebuyers returning to the market.
Borrowers have also been flocking to deposit-free mortgages, while the government’s anticipated support for 99% mortgages is likely to spur market activity further.
However, Robert Gardner, Nationwide’s chief economist, urged caution: “The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market… Nevertheless, near-term prospects remain highly uncertain, in part due to ongoing uncertainty about the future path of interest rates.”
Nationwide itself raised rates on its mortgages this week to reflect rising swap rates on wholesale money markets, which lenders use to fund their lending.