House Price Rises ? A Cautionary Tale
919
Finance > Real Estate
Mar 1, 2007
Michael Challiner -
House Price Rises ? A Cautionary Tale
In general, property prices appear to be rising. Between January and May 2006, the uplift in house prices across the United Kingdom averaged 4.4%. In the event that this trend continues, then the yearly rise will be 13%. This will put the average house price at almost ?195,000.
The Council of Mortgage Lenders confidently expects 1.2m property sales to be completed this year. This is a rise in the 970,000 previously predicted. They also expect mortgage loans to be ?10billion more than they had thought, at a total of ?85billion.
All this sounds very upbeat and encouraging. New loans approval for house purchases in March 2006 was more than 25% higher than for the same period 12 months earlier.
However, first time buyers are finding it especially difficult to get on the first step of the housing ladder and in some areas, particularly the South East of England and London, prices have been fairly static. First timers are needed to set off the sequence of events from starter homes upwards.
In many other parts of the country, including the north of England and Wales, house sales have continued to be buoyant, levelling out the average price of homes. According to the Halifax Building Society the rate of growth is expected to even out across the UK and it is thought that prices will rise to in excess of three times the predicted level during 2006.
Capital Economics, the economics consultancy, have been predicting that property prices will start to drop in the UK market for the past few years and was of the opinion that prices would drop by 5% in 2006; however they appear to have been over cautious according to the above figures are correct. There is some cause for caution though.
The Council of Mortgage Lenders has revised its forecast regarding interest rates and now expects the cost of borrowing to rise, maybe from 4.5% to 4.75%. Their economist, Jim Cunningham, thinks that demand should remain vigorous in the coming months but says that confidence and activity are closely linked with interest movements and predictions. The result of this could be a more modest rise in house sales after the recent highs. He does, however, look forward to a better outlook for 2008.
Mortgage lenders are becoming increasingly more cautious regarding their lending levels and the size of mortgages they will fund. This in turn limits the budget of the potential buyers.
The problem is that interest rates have been exceptionally low in recent years, in fact at their lowest level since 1955 and this has created an exaggerated level of debt. A rise in the mortgage rate may result in more people falling behind with their mortgage payments and an increased likelihood of their homes being repossessed.
Some caution is needed in this market. Purchasers who have taken on large loans on the back of the rise in houses could find some of the above factors worrying. If interest rates rise there could be an adverse effect on house sales and people could find themselves with increasingly expensive mortgages whilst there may be some stagnation in the property market, if not actual falls in prices.
It seems to be a time to exercise some caution. Mortgage debt can creep up and your house could just be slightly less of the asset in once was. Take care. Express offer its clients access to home insurance, car insurance and mortgages
The Council of Mortgage Lenders confidently expects 1.2m property sales to be completed this year. This is a rise in the 970,000 previously predicted. They also expect mortgage loans to be ?10billion more than they had thought, at a total of ?85billion.
All this sounds very upbeat and encouraging. New loans approval for house purchases in March 2006 was more than 25% higher than for the same period 12 months earlier.
However, first time buyers are finding it especially difficult to get on the first step of the housing ladder and in some areas, particularly the South East of England and London, prices have been fairly static. First timers are needed to set off the sequence of events from starter homes upwards.
In many other parts of the country, including the north of England and Wales, house sales have continued to be buoyant, levelling out the average price of homes. According to the Halifax Building Society the rate of growth is expected to even out across the UK and it is thought that prices will rise to in excess of three times the predicted level during 2006.
Capital Economics, the economics consultancy, have been predicting that property prices will start to drop in the UK market for the past few years and was of the opinion that prices would drop by 5% in 2006; however they appear to have been over cautious according to the above figures are correct. There is some cause for caution though.
The Council of Mortgage Lenders has revised its forecast regarding interest rates and now expects the cost of borrowing to rise, maybe from 4.5% to 4.75%. Their economist, Jim Cunningham, thinks that demand should remain vigorous in the coming months but says that confidence and activity are closely linked with interest movements and predictions. The result of this could be a more modest rise in house sales after the recent highs. He does, however, look forward to a better outlook for 2008.
Mortgage lenders are becoming increasingly more cautious regarding their lending levels and the size of mortgages they will fund. This in turn limits the budget of the potential buyers.
The problem is that interest rates have been exceptionally low in recent years, in fact at their lowest level since 1955 and this has created an exaggerated level of debt. A rise in the mortgage rate may result in more people falling behind with their mortgage payments and an increased likelihood of their homes being repossessed.
Some caution is needed in this market. Purchasers who have taken on large loans on the back of the rise in houses could find some of the above factors worrying. If interest rates rise there could be an adverse effect on house sales and people could find themselves with increasingly expensive mortgages whilst there may be some stagnation in the property market, if not actual falls in prices.
It seems to be a time to exercise some caution. Mortgage debt can creep up and your house could just be slightly less of the asset in once was. Take care. Express offer its clients access to home insurance, car insurance and mortgages
Write a Review
Add to My Favorite
Refer it to Friend
Report Article
Other links owned by this user
When it comes to home contents insurance, it?s so easy to get left behind in your valuations. It?s simple enough to go through the rooms, in your mind. Lounge ? carpet, sofas, display cabinet and contents. Bedrooms, carpets again, beds, furniture ??. And
Category:
Is it coming round to time to renew your car insurance? Do you, like 23% of car owners, just accept quote and stay with your insurer? Does it matter that premium is 5 or 10 per cent more expensive than last years? Maybe it?s just not worth
Category:
In general, operty ices appear to be rising. Between January and May 2006, the uplift in house ices across the United Kingdom averaged 4.4%. In the event that this trend continues, then the yearly rise will be 13%. This will put the average house
Category:
Amnd ws 42 when she ws given the difficult news tht she hd ovrin cncer. The West Yorkshire womn received chemotherpy tretment fter dignosis, but Amnd becme one of the unlucky ones. She hd bd rection to the chemotherpy
Category:
The companies that loan people money then add on sky high interest rates might claim to be doing people a favour by offering them the chance to have instant cash. Instead, they are crippling the poor with debt. So says the Competition
Category:
Almost one pensioner in four does not have enough money to fund their retirement, research from Prudential reveals, and one property-owning pensioner in five thinks they will have to downsize to make up the difference. Along with those
Category:
You may have noiced an increase in your healh insurance premium recenly. Here we examine some of he possible reasons for his and look ino ways of combaing hem. According o he marke-research group Daamonior, medical inflaion is
Category:
The number of people with one or more credit ds has grown at an unbelievable rate in recent years. Like the mobile phone, the credit d has become a way of life for many people, something they?d be lost without. The offer of a store
Category:
On June 1 st 2007, the law concerning the buying and selling of houses changes. From that date onwards everyone who wants to sell a house has firstly to prepare a Home Information Pack (HIP). And if you don't? You're in the frame for a
Category:
Have you filled in a life assurance application recently? There?s a little box that strikes fear into the heart of the ?slightly overweight?. It simply asks you to state your weight. Do you go straight to the scales, undress to the state of nudity and
Category:
The Financial Services Authority has recently carried out a review of the way in which information and advice is given to retail customers purchasing financial products. One of the products which they considered was the sale of Critical Illness
Category:
The Council of Mortgage Lenders? figures are showing a growing trend in interest only tgages. From January to March 2002, 9% of new tgages were interest only. Now take the period from October to December 2005, and the amount of new interest only
Category:
Other links at Finance > Real Estate
Sugar Land is a city in Fort Bend County, Texas and is the home to many master planned communities.
Category:
Selling a house anywhere in the world is a cumbersome process. It takes patience and time to find the right buyer who is prepared to pay a suitable price for your home.
Category:
There are many tricks and techniques that can help improve your knowledge when it comes to dealing with investing in real estate. There are new ways and methods of doing things and handling situations that are worth learning about.
Category:
Winning at the Monte Carlo casino might be a spectacular short term gain, but for a longer term investment Europe's favourite tax haven could be offering a safer investment in property...
Category:
As an investor, or a soon to be investor, it is essential to know when to jump (and when to run, for that matter.) For those considering property options as their method of being caught, it can take some time to get the necessary tools and resources in li
Category:
Site Sponsor
Directory Statistics
Articles: 68214
Categories: 501
Yahoo Entertainment
