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Further falls in the Housing Market
The stock market isn’t the only thing that’s been falling from the start of this year. Estate agents Rightmove have noticed a house price fall for the third month in a row in January. Asking prices were down 0.8% in the five weeks to 12th January, continuing a downward trend in prices since the beginning of Autumn.
It’s good news for first time buyers, who have recently been priced out of the market. With the average wage being around £22,000, and the average house price a being close to £200,000, it’s little wonder that fewer first time buyers made it onto the property ladder in 2008 than any time in the last twenty five years.
Many commentators are now speculating that the market is set to fall during the coming year – the first yearly dip since 1995. David Kuo of the Motley Fool financial website expressed one of the more controversial views by saying that prices could fall by as much as 20%. This predicts nothing less than a crash, and many other commentators disagree. In general it is agreed that the UK housing market has become subdued, as indicated by monthly rises and falls, and overall the housing market will be flat. When inflation comes into account then it is possible that prices will drop in real terms.
One possible cause for a decline in house prices is a potential shortage of mortgage money in 2008. Products offered in the mainstream mortgage market declined by 16% in the three months running up to October 2007. And although mortgage lending reached a record £362bn in 2007, mortgage approvals tailed off at the end of the year as the market showed signs of slowdown and lenders tighten their belts. A lack of lending means fewer people being able to finance a move, and therefore fewer house purchases.
Of course, such news doesn’t come as particularly welcome for those who have bought recently or in the past year. Most people would have seen small gains, but now they are set to slow, meaning it will be more difficult to release equity through a secured loan or remortgaging. With current prices being touted as overvalued at the moment, it’s a wonder whether they will continue to rise over the long term unless Britain’s average income can match the increase.
There are still good mortgage deals to be found. Try reputable banks such as Alliance and Leicester who have a stable financial basis.
Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.
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We normally do not charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee would be £500