Cooling Housing Market

The British Bankers Association (BBA) said there was fresh evidence of a cooling housing market after reports of mortgage lending slowing further in November.

The UK's leading Banks lent £500m less than in October. This even while the level of mortgage approvals has recovered 4% to almost 45,000 in November, against the record low recorded in October.

BBA figures also showed consumer credit growing at 4.6% in November. Although against this, repayments continue to outstrip new spending. The annual growth figure has dropped from almost 10% to just 4.3% as borrowers find it harder to take out loans.

Interest Rates Could Drop 1% In 2008

A prediction of rate cuts comes in reports from financial analyst, the Centre for Economics and Business Research and the European bank.

It is predicted that there will be a rate cut of quearter of a percent in January 2008, followed by 3 further rate cuts throughout the year. This would return the interest ate to 4.5% - the same as when the rates started to be put in August 2007.

Whilst not good for those with Savings Accounts and certain types of mortgages, for example fixed rate mortgages, those looking for new mortgages and on tracker mortgages should benefit.

Shop Prices Could Fall

An EU rulling has left credit card companies with the message to cut card fees charged to retailers. Currently these fees amount to an equivalent of £40 per household per year in the UK and the Office of Fair Trading and leading retailers have described them as an 'unfair tax'.

The ruling applies to charges on consumers travelling between EU countries, but should set a legal precendent for consumers within their own countries. Top retailers have promised to pass on savings made to consumers.

More Reports Of House Price Drops

Property website Rightmove found asking prices fell to an average of £232,396 (down £7,590), blamed on the 'Hip effect' along with the traditional slowdown in December.

Hip rules now cover one and two bedroom properties since last Friday adding an extra 1.1% to the fall and brought 'further confusion at a sensitive time for the property market,' said the group. London properties suffered most as a surge of cheaper-than-average one or two bedroom properties came on to the market.

Prices dropped by 6.8% in the last month. Rightmove reported this would have been reduced to 4.5% without the HIP deadline. Its data showed that the percentage of one and two bedroom sales increased from 38% of new sales this time last year to 48% in the first week of December this year.

Fresh support for Northern Rock

The Government has offered fresh support to Northern Rock by obligations with taxpayers' money.

The Treasury extended its guarantee on £24bn of savers' deposits. The guarantee now also covers a range of unsecured financial arrangements. The taxpayer has also lent Northern Rock £25bn through the Bank of England. The new guarantees cover uncollateralised and unsubordinated wholesale deposits, payment obligations under derivative trades, and payments under Northern Rock's Granite mortgage securitisation programme.

Nearly A Million In Credit Crunch Difficulties

Up to a million families are struggling to pay off their mortgages, a report reveals today, with a further 1.8 million people saying they have hit problems 'at least occasionally'.

The Bank of England survey shows that increasing interest rates have lifted homeowners' annual mortgage payments by a total of £3.6bn in the past year. The situation is expected to worsen as the global credit crunch prompts banks to tighten the supply of money even further to shore up their own finances.

HIPS For All

As of today sellers of all 1 and 2-bedroom homes will be required to provide a HIPS pack containing an energy performance certificate, title evidence, standard searches and freehold or leasehold details.

This is the last groupf of properties affecting by the phasing in of the scheme.

Sub Prime Crisis In Britain

Citizens Advice (CA) report that firms who specialise in loans to those on low incomes or with risky credit histories are taking a hard line when customers fall behind on payments.

It was the problems with the sub prime mortgage market in the USA that started the credit crisis. Some analysts have suggested that repossessions could reach 70,000 in 2008 - the highest since 1991.

The CA balmes the crisis on finance companies selling expensive home loans that were 'doomed to fail'.

The CA report looked at 1,200 cases and reveals how difficult the target of home ownership is for many on low incomes. Its research found that as many as 770,000 people have missed at least one mortgage or secured loan payment in the last 12 months.

It claims sub-prime lenders have handed out loans to many people on low incomes or with a patchy credit history that they cannot repay.

Interest Rates Cut

0.25% was cut off the base rates yesterday, much to the relief of hard pressed mortgage payers. This is the first interest rate cut for 2 years. But economists fear that the rate might have to be reduced to 4% within the next 12 months to revive the economy.

But not all banks have cut all of their rates. Those on Base Rate Trackers should see immediate relief - about 30% of borrowers. And in some cases Standard Variable Rates have been cut, but not across the board.

Interest Rates Could Drop Today

The possibility of the first interest rate cut since August 2005 emerged yesterday after further evidence of a slowdown in housing and consumer confidence.
However, the Bank's Monetary Policy Committee will be wary about cutting rates too early and pushing inflation beyond its 2% target. The decision will be announced at noon today.

Some experts say there is even an outside chance of a half-point rate cut from 5.75%to 5.25%.

Credit problems have bitten again in the last month, effectively tightening monetary policy after the rate at which banks lend to each other - known as Libor - soared. If the Bank cuts rates today, a quarter-point reduction to 5.5% could knock around £16 a month off the cost of a typical £100,000 mortgage. Good news for borrowers, not so good for those with savings accounts.

Third Month Of House Price Falls

The Halifax reported that house prices fell by 1.1% in November, the third consecutive month of falling house prices. This is the first time since 1995 that they have reported 3 months of price drops.

The Bank Of England Monetary Policy Committee will meet today to discuss whether interest rates should be altered tomorrow. Pressure is on for a rate cut to prevent the economy heading towards a recession next year.

House prices have been affected by rising mortgage payments and the effective lowering of salaries due to inflation. It is this inflation problem that could cause the Bank to hold interest rates at their current level into next year. Whilst this may be bad news for borrowers, net savers are benefiting.

House Price Drop Ahead

Morgan Stanley chief UK economist has warned that house prices could drop by as much as 10% over the next year. This would mean that buyers who bought this year with 95% mortgages could face the prospect of negative equity - where the amount they owe on their house is greater than the value of the property.

And the pain won't end there. He also predicted further price drops in 2009. These predictions are caused by the mixture of interest rate rises and the credit problems with the banking system, which have combined to make mortgage rates more expensive and mortgages more difficult to come by.

Too Many Empty Houses

A Halifax Bank report has shown 289,000 properties are sitting empty for more than 6 months. This is more than the Government's aim for new properties being built per year - 240,000.

Lack of available properties is generally blamed for house price rises and the figure unoccupied long term has fallen slightly. But critics are saying that the house price problem is caused by too many new builds targeting the wrong buyers, leaving a shortage of family homes.