Is there really stability in house prices or is it actually just the higher level houses that are supporting the market?

It was only a matter of time before house prices eventually would be supported by quantitative easing and lower interest rates. The Bank of England have not made the same mistake as last time and were aggressive in their monetary policy which has clearly had an impact on the confidence levels of the homeowner.

The news that across the UK house prices have found a support level will be welcomed. This will allow lenders to begin increasing the level at which they lend and to relax the extortionate rates they are charging for homeowners with higher loan to values.

Despite what most people might think, the prices are not being supported at the higher end. In fact it's quite the reverse. Detached and semi detached properties reported a fall in the most recent figures and it was the properties most attractive to first time buyers that proved the winners. In fact the properties in categories such as flats and maisonettes were indeed the biggest winners rising near 1% in June alone. I suspect these numbers matched our enthusiasm in this column in May when we could see that confidence was making its way through to the enquiry levels for new mortgages which we reported as the highest level in history, in fact higher than the peak of the housing market.

Much of this would have been a surprise given what house prices should get to. At the peak of the market I said house prices would fall, and fall to the first point I stated house prices were expensive, and that was 2003. Quantitative easing and amazingly low interest rates look to have halted the house price just before then with prices now turning at April 2004 levels.(1)

Will it be sustained? There are two key factors: First time buyers in rented accommodation and investors.

The fact is many first time buyers and investors will be looking at today's interest rates and realising they are potentially missing an opportunity. The cost of rent is considerably more than the cost of a mortgage and many first time buyers will seek this opportunity to dive into the market at 2004 levels. This is just as evident in the

mortgage enquiry levels reported for June.

Investors who like property will try to 'time the market' but at the same time will be mindful their capital in the building society is returning nothing. There is never a bell rung at the bottom of the market but if ever there was a noise just like it, it is there now.

The Bank of England's policy appears to be working. If you also remember back to my column in November 2008 where I explained that fiscal policy takes eighteen months to fully make its way through, everything appears to be going according to plan. Mr Brown is eight months into this campaign and in ten months he will have an election! Work it out.

One of the greatest benefits of investing into property is the ability to use someone else's money to invest. Unlike cash investments such as equities, an investor can gear into a property by borrowing from a lender, something only really available to a sophisticated investor in shares.

If this confidence bites after the summer lull, we could easily see May 2009 as the low point in the housing market.

In the meantime we would encourage readers to approach their mortgage broker to consider the benefits of fixing their mortgage considering the considerable hike in the cost of fixed money and the drive in mortgage enquiries. A support for house prices will support confidence, which in turn will make its way through to increased spending and good old inflation. It might be a strong decision to fix now when you are on a low standard variable but if quantitative easing has its true effect, higher interest rates will be on their way.

For a list of the best mortgage rates call Matt Higham on 0845 230 9876, e-mail info@wwfp.net

Source: land registry (1)

Your home may be repossessed if you do not keep up repayments on your mortgage