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Two recent house price indexes have found the UK property market to be regaining a little momentum with continued price increases – but what does this mean to offset borrowers?

The latest house price index from Nationwide found that house prices increased by 1.6% in August this year, the fourth month in a row that house prices have increased. It also found that year-on-year figures show that house prices are less than 3% down on what they were 12 months ago – meaning prices are likely to be back in the black by the end of 2009.

Also, the Land Registry found that house prices had increased by 1.7% in July, the largest amount its index has jumped in a single month for five years.

So what does this all mean for you? Well simply, it means you have more money to play with – as equity in your home increases, so does your lump sum’s potential. Since the credit crunch began, people who have been investing into their offset have been seeing their saved lump sums mean less as house prices crumble.

But now, as prices begin to slowly rise, they can be safe in the knowledge that their lump sums are doing even more – the bigger percentage of your home you own, the less you owe, which means your offset has a bigger affect on your remaining mortgage.

So while we are not out of the woods yet – the Land Registry, whose data collection differs from Nationwide says year-on-year house prices are still nearly 12% down on prices 12 months ago – house prices are rising. This will hopefully get more offset mortgage holders saving as they begin to see even better returns from their investment.

SOURCE: Nationwide, 26/08/09, Land Registry, 28/08/09

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