House Price Spy Blog

After my blog of a few weeks ago I thought I would follow that up a little bit. Gordon Brown had vowed not to go down the route that the US has which led to instability in financial institutions saying that they were on their own.

With the Northern Rock hysteria caused by the TV and media with news images of pensioners taking out their life savings (the next day they would put it all back in of course) Gordon Brown buckled and said he would cover Northern Rock and any savings that were kept in there would be covered. As if by magic people returned the next day to pay back in their money-cue smug grin from Gordo for saving the day…

Northern Rock have been criticized for selling risky mortgages especially to first time buyers.

The Northern Rock fiasco has made banks think twice about inappropriate lending, many mortgage lenders have pushed their rates up to 11.5% for some higher risk categories. More and more lenders including credit cards have begun turning away potential borrowers, however this message would have been so much stronger if Gordo had not backed down and relented to pressure.

The last financial institution to go under was Barings Bank in 1995, there was no Treasury assitance on that occasion.

You can’t have failed to notice that there was somewhat of an international crisis going on…American lenders have been criticized for irresponsible lending causing chaos in the international markets. The US Treasury has used reserve federal cash to consolidate lenders.

The governor of the Bank Of England Mervyn King has now requested that Gordon Brown not bail out financial institutions in the way the US have done and this has sparked a fear that house prices will drop in the UK as lenders and their shareholders bear the brunt of this crisis.

The raises in mortgage borrowing rates of the last few months have put a little bit of caution into borrowers and this will have a knock on effect on house prices in the years to come. Combine this with the reduction in bank profits and shareholders payments and you have a more difficult position for many borderline borrowers in the UK.

Any crisis abroad will have the usual trickle down effect in the UK with finance and property the expected sectors to be hit hardest.

Gordon Brown still has the option to use reserve funds to back up affected lenders but seems unlikely to spend tax payers money for this purpose.

The Bank of England have kept the mortgage rate at 5.75% untill October 2007.

The rate has now remained unchanged for two months after 5 successive changes which might suggest that mortgage inflation is now more managable.

Keep up to date directly at the Bank of England keep site

The mortgage interest rate is due for review on the 6th of September 2007 but what will the Bank Of England do?

The Bank Of England have shown that they are taking a pragmatic stance to reduce inflation and curb borrowing under these circumstances and more increases in the base rate are expected next month. Only time will tell, but this could be depressing news for homeowners especially first time buyers.

Get the details hot off the press from the Bank Of England.

Only time will tell, House Price Spy will keep you fully updated on any changes!

With all the stories that have been around last week regarding the lack of affordable housing It raises the question that with flooding also in the news this week, can we keep building in ‘flood plains’?

To keep abreast of the increasing need for afordable new build housing it is claimed that we will need 140,000 new houses per year whereas only a few hundreds ar enow being bult across the country.

What is the permanant solution to this problem?

After having a look at what Gordon Brown said since my last blog I dont think he has said much wheih was unexpected and will not really changed the way we tackle a possible housing shortage in the UK. A summary of Gordons housing policy is as follows:

Assistance to community housing (mainly in the North of England and the Midlands)

Home Information Packs - See Clarkes earlier blog…

Tax breaks for ‘Carbon Neutral’ homes

Priority purchase scheme for first time buyers and key workers.

This is all well and good but apart from the last point there are more ways they could have tackled this problem. This crisis is due to the total number of properties on the market compared with the rising population not how green the properties are and if they are in an established community or not. New build houses often have to create their own communities from scratch.

Tonys initial warcry was ‘Education, Education, Education’ and Gordos appears to be ‘Location, Location, Location’.

The Bank Of England has anounced a fifth increase in the mortgage rate yesterday.

This will result in mortgage payers paying around £15 more for a £100,00 mortgage.

This is the fifth increase in the mortgage rate in the space of a year. This was announced yesterday by the Governor of the Bank Of England who sets the rate rather than Gordon Brown…or his successor Alistair Darling.

The mortgage rate was raised by 0.25% to 5.75% in an attempt to halt rising inflation.

The fifth increase in the mortgage rate could result in hardship for some borrowers who have seen utility prices, general shopping prices and tax raised in recent months.

The Bank of England has just announced that it will leave interest rates unchanged at 5.5%.

Rates were expected to climb this month so, many mortgage holders will be slightly relieved.

Interest rates unchanged for another month…I dont think anyone will be complaining.

The next date for Interest Rate change will be the 5th July 2007. Last month saw an increase of 0.25% to the present 5.5%

This months Interest rates unchanged announcement follows an inflation rate of 2.8% with a target of 2%.

If you want tmore detail or want to get this info straight from the horses mouth Visit The Bank of England site for details of trends and explantions of increases and policy.

The BBC reports that Home Information Packs are to be delayed until 1st of August 2007 and will start off only for homes with four bedrooms or more that go on sale.

The packs will be compulsory in England and Wales but not in Scotland until 2008, when Scots will get there own version of HIPs.

Packs will include:

• Evidence of title.
• Copies of planning, listed building or building regulations consents.
• A local search.
• Guarantees for any work on the property.
• An energy performance certificate.

Find out more by visiting the article at the BBC News website.