House Price Spy Blog

The Council of Mortgage Lenders (CML) has warned the government that up to half a million households in the UK will struggle to pay their mortgages in 2009 and up to 75,000 will face some sort of mortgage default during the same period.

During 2008 over 200,000 people were reported as having some sort of difficulties meeting their mortgage payments whether this was defaults, missed payments or an enforced change to payment schedule.

The ownership of a home is one of the basic economic measures along with basics such as GDP and the ‘standard of living’ so this will not be what Gordon Brown wants to hear. The US has seen record breaking numbers of mortgage defaults and repossesions, and Gordon Brown has pledged Billion of UK tax payers money to bail out morgage borrowers.

The government was given these figures a few weeks ago, it remains to be seen what effect recent measures will have such as the drop in the lending rate and finance put in place for struggling borrowers.

PM Gordon Brown will soon announce the second part of his aid package (the first part was lending £50 billion to lenders from Public coffers) that he hopes will see credit again readily available and prop up the housing market. Sales have falled to their lowest ebb for 30 years with just 32,000 mortgages were approved during October.

While a lot has been made in recent months of the lack of sales, only 4% of households in the UK are in negative equity which considering the inflated prices in certain areas of the UK such as London, Edinburgh and popular commuter centres in middle England is not surprising.

The worst part of this whole thing are the predictions (and they are just predictions) that over 200,000 people working in property and finance will be facing unemployment over the next 2 years.

When this hits we will really see the extent of the problem, with less money in the economy and no extra cash around manufacturing will suffer and prices will rise compared with earnings.

However many people are seeing a difference in their mortgage payments almost equivilent to a payrise, how long will this last? Can we expect Gordon Brown to think in the long term as it seems likely he wont have power this time next year! We are needing some firm guidance and planning for well into 2011/2012 rather than tax cuts to ewin the next election!

The news story of the day appears to be that Gordon Brown is set to offer public money to assist families facing respossesion of their home, press figures we citing that ‘up to 75,000′ familes were in this bracket but we can take this with a grain of salt! The government scheme means that the public money will be used to pay any mortgage in danger of default, giving hard up familes a ‘mortgage breather’. £1 billion of public money has been earmarked for this bail out, which can be put into effect for properties worth £400,000 and less (so most people then!).

The US has seen millions of repossesions in the last few months and this will be a problem as long as negative equity caused by buying overpriced property and the collapse of the mortgage market.

The pound has been falling with respect to the Euro, and you cant get much more that 1.1 for the pound, this is fairly disasterous for companies who regularly buy overseas products or anyone planning a holiday. There are even those people who have speculated that this is a deliberate plan by the PM to push the UK towards joining the EU on a full basis…

Gordon Brown is not looking too clever especially after going back on his plans for changing tax for low paid workers.

There was a new blow to the finance industry announced today, millions of people across the UK may be able to claim money back on loans taken out that have errors on the loan agreements. While this may be good news for a few people struggling to pay loans ,this will mean everyone else will have to cover any shortfall in payments by paying higher rates.

The Consumer Credit Act means that any errors (including the wrong rate or other details) could mean that loans are written off, with many lenders settling out of court rather than fight a losing battle in court

The chances of this happening are higher if loan insurance (PPI premium) was taken out-at least there was some use for PPI!

This is all speculation, but this could be exactly what the average person in the UK does not want, just as the finance industry was starting to get back to something like normality.

In an even more surprising move than last month the Bank Of England have cut the mortgage rate again to 2% which is the lowest level since 1951. This follows on from last months 1.5% cut.

Many people (me included) are enjoying the lowering in their mortgage payments with almost half being cut from payments in recent month.

The government and BOE had to been seen to do something, and this will ease the hardships that borrowers have experienced. The Bank Of England have indicated that further action will need to be taken, with possible further cuts to come plus investment in mortgage and commercial debt to free up the borrowing system.

Expect more changes in the months to come, the crisis is expected to extend well into 2010.

The Government agency who produce figures for release to the press and public have been accused of sugar coating figures to soften the blow of the credit crunch.

The Land Registry do not include reposessions, auctions and other sales on the grounds that they dont reflect the full price sales figures. In reality, the figures mentioned represent ‘non-commercial’ properties only so The Land Registry CAN discount them. Other ‘non-commercial’ include multi million pound office premises etc so we would not expect them to be included!

Personally I dont see the problem, the people who have a problem with this way of producing figures are the press and lets not forget that they want a severe a story as possible to sell newspapers. Thats what killed the feel good factor in the first place! while lenders such as the Nationwide and Halifax produce more sensational figures The land Registry have been using this system for years without any complaint. Or are the press saying that The Land Registry changed the way they could their figures to suit the incumbent New Labour Government? Nope.

Yet more press anti-spin has it that over 45,000 homes will be repossesed, now where did they get these figures from? Could they have looked at the US and scaled it to the UK size population. Yet another spin!

The media seems to be seeing a bit of daylight for a a change! After the doom and gloom it seems that property prices have evened out and there is a bit of a relative ‘feel-good’ factor is back. The average for England fell by 2k during August, 10k during September and the latest figures indicate that confidence is returning. This could have to do with the 1.5% drop in the interest rate from The Bank Of England and the forceful line the government have taken with lenders to pass this cut onto borrowers.

Everyone who has a variable mortgage will have seen a diffference in their payments, which will vary between lenders.

This is the first time since October last year that we can see light at the end of tunnel, but is certain not to be the end of the fall in house prices with at least 2 years before prices will start to grow with 2007 rates.

House Price Spy is the easiest way to keep up with trends local and national in house prices and news about the market in the Uk!

Homeowners who need or want to sell up are finally lowering the prices by an average of over £10,000. There are had been a growing trend in fixed prices with many sellers waiting on the right price rather that lowering prices. It seems that many are now lowering the price they will require to sell.

While this will be a blow for sellers it means it’s a buyers market and there are loads of bargains out there particularly for first time buyers who have saved a deposit and were previously ‘priced out’ of the property market.

There is good news on the financial front with inflation rates set to fall to 1% and The Woolwich passing on recent cuts in lending rate of under 4% for the next year

The government has pressed lenders to pass on the recent cut in interest rates from 4.5% to 3% to borrowers and it looks like this message is finally getting through with rates available to customers set to fall into line with the pre credit crunch level of 0.15% to 0.2% variation from the Base rate as set by The Bank Of England.

The cost of inter lender borrowing has now dropped back to 4.2% meaning that the crisis in mortgages should now start to improve.

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The papers have been full of the following story: the credit crunch could ruin over 1.3 million people who have ‘interest-only’ mortgages due to the drop in house prices. Interest-only mortgages were increasing popular in recent years, with people planning to use the projected rise in value to pay off a lump sum in the future, but with the recent financial problems many have not been able to save as expected.

For people who bought at the top of the market this means negative equity.

While property prices have dropped, prices will start to rise eventually-the industry is making a guess of 2-3 years before prices start to rise.

This will affect anyone having to sell in the next few years before the market recovers and anyone who bought property at above market prices. The papers have concentrated on people who dont have equity in their property or have trouble paying their mortgage.

Many people are questioning the government for allowing lenders to sell interest only mortgages which facilitated buyers to buy over their capacity to pay. This is just one of the controversial products that appears to have caused this whole crisis in the first place, the government will need to legislate clearly what can be leant to whom and under what circumstances. Borrowers will have to have a minimum deposit and be paying of a certain amount each month etc.

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