The Bank Of England has reduced the mortgage rate for this months by a quarter of one percent to 5.25%.
This news follows concern that house prices in certain areas of the UK are falling with respect to the rest of the UK and the crisis in finance including Northern Rock.
See more detail and get next months changes direct ffrom The Bank Of England website.
Annual average property prices in the UK dropped for 2007 for the first ime since 1995. The average price in England was £174,000 which is down 11K on the prevfious year. The CEBR (Center For Economic Research)predicts a fall of 2.5% duing 2008.
This follows Northern Rock, US financial/lending crisis and last weeks stock market crash.
The lack of new available housing has not balanced out this trend, and people in new build housing and in outlying rural areas appear to be most affected.
Average property prices have not decreased since before New Labour took over and whether Gordon Brown is about to cut interest rates we will find out in the months to come.
With an election in the offing will Gordon Brown go medium term or short term? Average property prices will be determined by interest rates which there are predicted to be 4 this year….
The Scottish Parliament has put aside £24 million of tax payers to give first time buyers a step up on the housing ladder after a successful pilot scheme in Lothian.
Certain councils with higher than average property prices have been asked to join the scheme which allows buyers to buy a 60% to 80% stake in a property with a housing association paying the rest. The terms of this agreement have not been stated, is there a maximum spend or a minimum spend and are there any other restrictions? More as we get the details.
There was a 20 year low in first time buyers in 2007, with prices still rising in areas such as Glasgow and Edinburgh to record levels.
This scheme will most likely be extended to the rest of the UK in time, but for the moment places like Perth, Stirling and Aberdeen will see more first time buyers than previously.
The Bank Of England has maintained the rate of interest for mortgages at 5.5% for January 2008. The ruling was made on the 10th and follows a reduction in inflation to 2.1% with a target of 2%.
This will be good news for borrowers following a busy Christmas period and 5 consecutive increases in 2007!
Property prices are falling in some parts of the country and another raise in the the lending rate could have seen more pressure on sellers in terms of borrowers being put of by prohibitive rates of interest.
See all the trends and get details of the next change direct from The Bank Of England
The Nationwide Building Society claim that property Prices to level off in 2008. The slow down will be due to stricter lending conditions and less first time buyers being able to get on the property ladder.
Overall figures for the UK as a whole will see property prices fall by 5%, however if you live in Scotland they will rise by 4% and Northern Ireland’s increase will buck the trend of slowdown and rise by up to a third.
The mortgage rate was reduced this month to 5.5% down by 0.25%.
Get a full rundown on The Bank Of England Site.
Further to my other blogs about the Northern Rock:
1. Gordon Brown rules out offering any assitance to The Northern Rock.
2. The media cause panic with investors who proceed to get up early to withdraw funds.
3. Gordon Brown pledges to back The Northern Rock to the tune of several billion pounds.
4. Fickle savers rush to put their money back in.
5. Shares slump in price and the government are again forced to back up the Rock.
6. Sir Richard Branson tables a takeover bid for the ailing financial giant.
So let me get this straight if Alistair Darling says The Northern Rock would have gone failed if were not for his intervention then does that mean any financial institution that invest badly will be bailed out by the UK taxpayer? Or will we get a share of the profits when Sir Richard Branson takes over and turns it’s fortunes around?
Whats the point of making sound investments (on a personal level) if you have to subsidise others poor choices (on a national level)?
The Scottish parliament looks set to aprove legislation which would see another barrier removed from the foot of the housing ladder. The Single Surveys bill will make it manditory for every property seller to have a survey done prior to placing the property on the market.
Surveys depend on the size, age and value of the property and are usually around £200 to £400. This legislation will be great news for first time buyers but bad news for surveyors who are used to having repeat business on popular properties and sellers who will have another deduction from their sale price.
Single Surveys were piloted up north briefly in 2004.
Read Clarkes previous Blog about Home Information Packs
With legislators apparently keen to tip the balance in favour of buyers rather than sellers (see changes in Stamp Duty) there could be further changes ahead!
The UK is facing a housing crisis with properties returning to 1980s values of inflation and negative equity a real threat. New homes need to be built on a scale not seen since the 1950s to prevent a housing crash in ther UK.
The UK is presently producing around 200,000 new homes each year but this will need to rise by a third if we are to keep housing affordable for first time buyers. The National Housing and Planning Advice Unit (NHPAU) has produced a report saying that property prices will rise to 13 times average salary should this trend continue. With many people priced out of ownership and occupations who could traditionally buy property not being able to get on the housing ladder, this problem is set to grow.
This could effect the property market if there is a shift in outlook of middle earning, young people who see property as unobtainable and out of reach. Gordon Brown has promised action on new home building under his leadership.
Inheritance Tax seems ridiculous to many people me included. Would it be OK to go to a shop pay tax on something and then have to pay tax again once you were fnished with it-which is basically what happens with Inheritance tax! You pay tax on money to pay for your home and then when you die you pay 40% on it again!
With property prices rising more and more people will have to pay Inheritance Tax of 40% on propety valued £300,000 and over.
Gordon Brown has initiated measures to prevent Inheritance Tax avoidance which could be backdated to 1986! These would mean any payment of £5,000 or more would need to be considered as Inheritance. Pensioners who inherited property since 1986 will have to pay Inheritance Tax on it!
Fortunately for Gordon Brown with the scarcity of new properties and inflation in prices no-one will be able to afford one so most people will not notice! As usual the people with the most money will have the best advice and more options to avoid paying 40% tax on already taxed income, with the government penalising middle earners who have taken Government advice and saved carefully for their later years.
Inheritance Tax is set to bail out Gordon Browns government to the tune of £3Billion!
The Bank Of England has decided to make no change for October to the Mortgage Bank Rate. The last change was a 0.25% rise in June, this was the last of a series of rises which has checked inflation in property pricing and some concern about unsustainable prices and lack of adequate housing.
While there was no change for October, Gordon Brown will want to keep inflation in line with a possible election around the corner.
So there was no change for October, if you want to be the first to find out about the next rise on the 8th of November 2007. check out the Bank Of England Site.