A Little Piece of Good News for the Gloomy Property Market

Author: Danielle Fletcher
The housing market in Britain is on a decline with more and more people being forced to sell due to rises in mortgage interest rates, and less buyers willing to invest in housing. More first time buyers are staying away from the housing market altogether as lenders become stricter their lending criteria and harsher with their interest rates.

For those who need to re-mortgage the market is moving very fast. It was only last week that one of the larger bigger banks was offering one of the best rates on the market, just seven days later this rate had jumped up by half a percent. Recently it has increased by additional 0.20 percent. The bad news is that this is not the only bank to raise its interest rates in quick succession with all of the big four lenders pushing up their interest rates particularly on shorter term fixed rate deals. Now the average two year fixed rate deal is more than seven percent, leaving home owners facing a more expensive mortgage bill.

Mortgage problems have been compounded by falling house prices which have seen homes in some part of London fall by more than £25 thousand pounds in a month. These trends are not encouraging first time buyers who are already struggling to raise the high deposits needed and find an affordable mortgage. The number of first time buyers has decreased from 532 thousand in 2002 to 300,000 in 2007 and this year they are predicted to fall even lower. With so much doom and gloom surrounding the property market at the moment, buyers and sellers alike are waiting for some good news. And it seems that that good news may be on its way! An expert in the field has made predictions that this month could be the last month that mortgage rates rise and the effects of the credit crunch may start to ease. He is basing his predictions on the fact that margins for mortgage lenders were starting to make them good money again and therefore it made sense for banks to lower their interest rates in order to secure more people’s business

It may be time when banks realise that if they start to lend out more money at lower rates they will be able to find more good customers willing to take them. However the housing and mortgage problem in the UK is a bit of a vicious circle. The housing market needs first time buyers to keep properties moving and allowing people to move up the ladder. At the moment first time buyers are struggling to get mortgages as lenders are worried about loaning people money against a depreciating asset. Therefore only first time buyers with large deposits are being offered deals, as their deposits act as buffer against falling house prices. But as long as first time buyers are unable to access the property market, housing will continue to fall in price leaving those who have brought homes with little room for manoeuvre. Hopefully predictions of better mortgage rates will come true allowing more people to survive the property crash, however it would seem the UK is still a long way off enjoying the benefits of the previous housing boom.
Article Source: http://www.articlesbase.com/mortgage-articles/a-little-piece-of-good-news-for-the-gloomy-property-market-477215.html