Archive for 2010

The nine members of the Bank of England’s Monetary Policy Committee, which decides the base rate, have made their votes for December, and the rate will be kept at 0.5% for the 21st month in a row! Recent voting results would point to the rate staying at 0.5% for the foreseeable future since only 1 member voted for a rise in the rate.

As always though, despite the low base rate, mortgage rates are still several percentage points higher, and mortgages are still relatively difficult to obtain – even for those with a spotless credit rating.

As mortgage lenders continue to be very picky about who they will lend to and how much they will lend, more and more people are resorting to renting to resolve their accommodation needs. With the best deals only available to those with 25%+ deposits, potential first time buyers, in particular, are finding it very difficult to get on to the ladder. There are also some who are deliberately waiting as property price continue to slowly fall.

Fewer people buying houses has consequently caused an increase in demand for rented properties, which has enabled landlords to increase rent levels. Rent has now increased for nine months in a row, with the average figure for October being £691.

Jeremy Lead, RICS spokesperson, said ?The lettings sector has become increasingly strong over the past nine months, in contrast to the housing market which continues to slow?. This situation is expected to continue for the next three months at least.

New figures from Halifax suggest that house prices fell by a huge 3.6% in September – the biggest monthly fall since Halifax’s records began in 1983. Despite this record fall, house prices are still 2.6% higher than this time last year, with the average house valued at just over £162,000. The figure is similar to the value of 3.1% recorded by the Nationwide for house price fall in September. Halifax did comment that low volumes of sales contribute to volatile fluctuations in house prices. They also added that the large number of houses available on the market has pushed prices down.

The Bank of England has held interest rates at 0.5% for the 18th month in a row. The hold on rates was widely expected, but there is an expectation that it won’t be long before the rate is increased in order to keep inflation in check. Frustratingly for potential house buyers, the low base rate is combined with a high level of difficulty in arranging mortgages – although it would appear this is easing in recent months.

Homeowners who bought their property at the peak of the property market in 2007, have been warned they will have to wait until 2014 if they want to recover what they paid for their home according to the National Housing Federation. Their findings are based on forecasts Independent economists Oxford Economics forecast house prices would increase 22% over the next five years ? fuelled by a chronic under supply of new housing. According to the research, house prices will rise 7.5% this year, but will then fall again in 2011 by 3%, before recording a modest increase of 0.9% in 2012. This is probably difficult news to hear for people who did buy at the peak in 2007. But do remember, that it also means that your next house is also cheaper – if you are moving up the property ladder. Whilst it may be difficult emotionally to sell at a loss; if you have the cash available, you may be able to save yourself money by moving up the ladder sooner, rather than later.