Property prices may have hit rock bottom
[ Posted July 3rd, 2009 ]Plunging property prices may have hit rock-bottom according to the new man at the Bank of England who has a reputation for picking housing market winners.
Professor David Miles, has a reputation for making spot-on house price predictions – and he has told MPS that he feels the UK has hit the bottom of the property slump.
Miles, who forecast in 2006 that the market would crash, said that confidence in the property market is improving and that buyers would return.
In 2008, he accurately predicted house prices would fall 20%.
‘Expectations are crucial in the housing market and they look a bit better now than a few months ago. My hunch – and I put it no stronger than that – is that we have seen most of the overall aggregate house price falls," he told a committee of MPs at a Treasury Select Committee hearing on his appointment to the Bank of England’s Monetary Policy Committee.
The committee is the Bank’s inner sanctum that sets interest rates each month.
Meanwhile mortgage lenders have upped the amount they are lending, but not by as much as hoped, according to the Bank of England’s quarterly credit report for the period ending June 30.
The Bank of England also said the cost of borrowing is becoming dearer as lenders increase their margin on loans to customers.
The margin is the difference between the interest rate that the mortgage lender borrows money and then lends it to customers.
More mortgage funding is expected to hit the markets in the next quarter as part-nationalised banks free up cash to meet conditions laid down by the government in return for bailing them out earlier in the year.
Mortgage rates still remain the same and borrowers looking for the best rates still need substantial deposits, although lenders say they will lend at up to 90% property value – and even higher to a first time buyer with a guarantor
Best fixed interest rates are an average 6% for a five-year deal, but the best interest rates also come with demands from lenders for the highest deposits.
Mortgages for buying a home are generally more available than remortgages - loans for refinancing homes are down about 60% on the same period last year.
Mortgage comparison sites like this are still a good way to track down and compare the best fixed rates and best mortgage rates in general as lenders are updating their deals so quickly, it is difficult to keep up with the offers.
So, what’s the summer end of term report for mortgage lenders?
They certainly could try harder and play a better role in the market instead of protecting their own interests by tightening loans and protecting their profits by boosting margins.