FinanceTeam

Mortgage Lending still high

The monthly report from the Council of Mortgage Lenders (CML) has shown that homebuyers borrowed £29.4bn in December. This was down 10% on the £33.1bn borrowed in November. However, it was still a record high for the month and up 8.8% on December 2005.

In total homebuyers borrowed £346bn in 2006. This was an increase of 20% on 2005. The CML predicts that this trend will continue as house prices and demand for homes continue to rise. However, some first time buyers hoping to get onto the property ladder are likely to be put off by the latest interest rate rise. According to the CML, this group are now borrowing an average of £113,887, or 3.29 times their income.

Figures published by the Department for Communities and Local Government (DCLG) show that the average home in the UK now costs £199,467. Average prices were rising by 8.9% in November. There is variation between the regions with Northern Ireland showing the greatest increase in the year up to November. The DCLG figures are based on 50,000 sales completed each month, using 50 mortgage lenders, and the results are similar to other surveys.

The latest report from the Royal Institution of Chartered Surveyors (RICS) indicates that the housing market is now starting to slow down. This is mainly due to the interest rate rises last year.

Calculate your own inflation rate

This week it was announced that the official inflation rate, or Consumer Prices Index, has now risen to 3%. Mortgage payments are included in the Retail Prices Index which is up to 4.4%. The official figures are based on average spending patterns but personal experience of rising prices can be very different. You can now work out your personal inflation rate using a new government website.

The Office of National Statistics is hoping that the online calculator will help people gain a better understanding of how goods and services affect the inflation rate, and why experiences vary. You don't need to enter exact expenditure, just your usual spending in a variety of categories such as food, clothing and transport. You can also add in mortgage or rent payments and where you live.

Consumer groups have often said that the cost of living for many people does not correspond to government figures. This is particularly true for groups such as the elderly, unemployed and those on a low income. An investment company has calculated that inflation is highest for those over 75. This is because pensioners have to spend a large part of their income on fuel, water rates and council tax which are all increasing. However, younger people are not so affected as goods such as clothing and electrical appliances have fallen in price.