any surveys have
identified the lack of But in many other parts of the
first-time buyers as the country such as Wales and the
reason for the slowdown in prices North, prices have become cheaper
as house prices have reached such and the property market has
a level that it is becoming continued to surge ahead.
increasingly difficult to get
onto the property ladder. While, the Halifax has said it
expects the rate of growth to
Mortgage lenders are also even out across the country house
becoming more careful about prices will still rise to more
lending levels and the size of than three times the rate
mortgages they will grant which predicted this year, mortgage
limits the price potential lenders have also warned.
house-buyers can pay.
An economics consultancy, Capital
The number of new loans approved Economics, which has for several
for house purchases in March 2006 years been forecasting price
was 27 per cent higher than a falls, took the view that prices
year before and slightly higher would drop in 2006 by 5 per cent.
than the average for the past six However, the average property
months. values are expected to increase
by 7 per cent.
In some areas, especially London
and the South East of England, This could mean interest rates
prices have been static. being raised leading to more
First-time buyers are having a people falling behind with
particularly tough task trying to mortgages and having homes
afford a property in those repossessed, the Council of
regions. Mortgage Lenders (CML) warned.
fall in transactions,’ he added,
The organisation added it now indicating that prospects looked
expected 1.2million properties to brighter for 2008.
change hands this year, up from
the 970,000 it forecast But while interest rates remain
previously. very low at 3.5 per cent, their
lowest level since 1955 - a
It also predicts net mortgage number of analysts and market
lending will total £85billion, commentators have also been
much more than the £75billion warning against the exaggerated
expected. debt levels the low interest
rates have created.
But the group is also revising
its interest rate forecasts and They suggest prices can go on
now expects the cost of borrowing rising in some areas, though at
to end this year and next at 4.75 much more modest levels than
per cent rather than 4.5 per before.
cent.
During the first four months of
CML economist Jim Cunningham this year, prices across the UK
said, ‘Demand will remain robust rose on average by 4.4%. If that
over the next few months but trend continues then properties
confidence and activity are will end the year around 13% more
closely associated with interest expensive than they started. That
rate movements and expectations.’ could mean the average house
price reaches nearly £195,000.
This would result in ‘a modest
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