The Nationwide, the biggest building society in the UK, has reported falling house prices for the third month in a row.
It said that after December's 0.4% drop, January's drop was 0.1% - better than had been predicted by analysts at 0.3%.
This reduced the annual house price inflation from 4.8% in December to 4.2% in January, the lowest it has been since December 2005. This drop reduced the average house selling price by £1,607 to £184,473.
Looking at quarterly figures, prices fell 0.3% in the three months to January in contrast to a 0.9% increase in the three months to December.
These drops, along with yesterday's announcement by the Bank of England that mortgage approvals had dropped to their lowest level for 13 years, are making analysts to predict a quarter percent drop in base rates next week.
Thursday 31 January 2008
Wednesday 30 January 2008
One Million Families Could Be Homeless
The FSA fears that huge mortgages and other debts could put one million families in the UK at risk of losing their home over the next 18 months. Huge mortgage debts along with other debts such as store cards, credit cards and loans will combine to force many families over the edge. As many fixed-rate mortgages come to an end many families may find they cannot move to another cheap deal and will be left struggling with repayments.
It forecast that nearly 20% of families who took out a mortgage between April 2005 and September 2007 are at risk of having their home repossessed. This accounts for 1.04 million families who have taken out their first mortgage or remortgaged to a better deal.
These families are identified by having 2 or more of the three identifying factors:
- paying less than a 10% deposit
- mortgaging for longer than 25 years
- borrowing more than 3.5 times annual salary
150,000 families have all 3 factors and the FSA are particularly worried about these, having taken out the mortgage at a time when property prices were soaring.
If you are worried see Bankruptcy Help and find out about IVA before time runs out.
It forecast that nearly 20% of families who took out a mortgage between April 2005 and September 2007 are at risk of having their home repossessed. This accounts for 1.04 million families who have taken out their first mortgage or remortgaged to a better deal.
These families are identified by having 2 or more of the three identifying factors:
- paying less than a 10% deposit
- mortgaging for longer than 25 years
- borrowing more than 3.5 times annual salary
150,000 families have all 3 factors and the FSA are particularly worried about these, having taken out the mortgage at a time when property prices were soaring.
If you are worried see Bankruptcy Help and find out about IVA before time runs out.
Tuesday 29 January 2008
House Prices To Fall 10%
Neil Woodford, one of Britain's most powerful fund managers with investment house Invesco Perpetual, said house prices are simply too high and the average home will drop £18,500 by New Year's Eve, or £50 a day.
Some parts of the country could be even worse hit, with buyers of newly built flats aimed at the buy-to-let market worst hit, as he fears these will become 'almost unsellable'.
Neil said 'Although my forecast is for house prices across the UK to fall eight to 10% in 2008, the decline may be much worse in certain areas.'
But even the most pessimistic of the more respected housing commentators, Capital Economics, had been forecasting a fall of only five per cent this year.
You can check house selling prices in your local area for free, here.
Some parts of the country could be even worse hit, with buyers of newly built flats aimed at the buy-to-let market worst hit, as he fears these will become 'almost unsellable'.
Neil said 'Although my forecast is for house prices across the UK to fall eight to 10% in 2008, the decline may be much worse in certain areas.'
But even the most pessimistic of the more respected housing commentators, Capital Economics, had been forecasting a fall of only five per cent this year.
You can check house selling prices in your local area for free, here.
Thursday 24 January 2008
Rates Might Drop
Analysts reviewing the minutes from the Bank Of Englands meeting earlier this month in which there was only 1 vote for lowering interest rates are confident that there will be a quarter percent drop in interest rates in February.
There are already warnings for savers to snap up fixed rate accounts before the offers are withdrawn, but the cut is not expected to be anything like the rate cuts in the USA.
There are already warnings for savers to snap up fixed rate accounts before the offers are withdrawn, but the cut is not expected to be anything like the rate cuts in the USA.
Tuesday 22 January 2008
Mortgage Lending Falls
Falling confidence in the property market and tighter lending restrictions worked against the December interest rate cut and led to the lowest mortgage borrowing in December for 2 and a half years.
At £22.6bn, this was a 21% reduction against the previous December and 25% less then November, revealed the Council of Mortgage Lenders.
Overall, in 2007 almost £1bn was borrowed in mortgages per day - a £362bn. This is up 5% on 2006 in which £345bn was borrowed.
The Council of Mortgage Lenders' figures showed mortgage lending by building societies broadly flat during 2007 at £52.1bn, compare to £52.8bn lent in 2006. But net lending, which allows for redemptions and repayments, fell by 21% to £12.6bn.
Analysts predict "a very good chance of an interest rate cut in February, and at least one more during 2008".
At £22.6bn, this was a 21% reduction against the previous December and 25% less then November, revealed the Council of Mortgage Lenders.
Overall, in 2007 almost £1bn was borrowed in mortgages per day - a £362bn. This is up 5% on 2006 in which £345bn was borrowed.
The Council of Mortgage Lenders' figures showed mortgage lending by building societies broadly flat during 2007 at £52.1bn, compare to £52.8bn lent in 2006. But net lending, which allows for redemptions and repayments, fell by 21% to £12.6bn.
Analysts predict "a very good chance of an interest rate cut in February, and at least one more during 2008".
Monday 21 January 2008
House Prices Dropping
A new report by Britain's biggest property website Rightmove, has revealed that house prices have fallen for the third consecutive month. The 0.8% drop this month brings the total drop since October to almost 5%.
The average house price was £241,642 in October but now stands at just £230,428 - a decrease of £11,214, or around £120 per day.
Rightmove reported that house prices did rise last year, by just 3.4%, which is below the level of inflation (4%).
You can view latest house selling prices in your local area here for free.
The average house price was £241,642 in October but now stands at just £230,428 - a decrease of £11,214, or around £120 per day.
Rightmove reported that house prices did rise last year, by just 3.4%, which is below the level of inflation (4%).
You can view latest house selling prices in your local area here for free.
Friday 18 January 2008
Unfair Charges Test Case
The test case for unfair bank charge claims has started, with banks defending their position saying that customers agreed to the charges when they opened the accounts, therefore they are allowed to enforce such charges.
Charges can reach as much as £38 for slipping slightly into the red, whilst campaigners claim the real cost to the banks could be as little as £2.50.
An army of legal advisors is representing banks were in court to defend the eagerly awaited case.
Charges can reach as much as £38 for slipping slightly into the red, whilst campaigners claim the real cost to the banks could be as little as £2.50.
An army of legal advisors is representing banks were in court to defend the eagerly awaited case.
Thursday 17 January 2008
More Endowment Worries
Norwich Union has warned that 9 out of 10 of its endowment policies will not cover the repayment of the mortgage loan when they mature.
The Norwich Union expects half of the 69,000 policies maturing this year to show a shortfall. Last year's average shortfall was £1,470, but this was halved because the Norwich Union introduced a 'promise' in 2000. Within this scheme the Norwich Union helps to reduce shortfalls for some policy holders.
Saves with Commercial Union, whose policies are now under the control of Norwich Union, may receive only around £39,000 having paid £50 per month for the 25 year term. This is 10% down on the over £43,500 paid out to a comparable plan taken out a year earlier, in part due to new policies becoming more expensive in 1982.
But these figures are both worse then the almost £49,000 that would have been paid out two years ago to a similar policy, even though the fund that supports these investments grew by 11.7% and 5.4% in the last two years.
The Norwich Union expects half of the 69,000 policies maturing this year to show a shortfall. Last year's average shortfall was £1,470, but this was halved because the Norwich Union introduced a 'promise' in 2000. Within this scheme the Norwich Union helps to reduce shortfalls for some policy holders.
Saves with Commercial Union, whose policies are now under the control of Norwich Union, may receive only around £39,000 having paid £50 per month for the 25 year term. This is 10% down on the over £43,500 paid out to a comparable plan taken out a year earlier, in part due to new policies becoming more expensive in 1982.
But these figures are both worse then the almost £49,000 that would have been paid out two years ago to a similar policy, even though the fund that supports these investments grew by 11.7% and 5.4% in the last two years.
Wednesday 16 January 2008
House Prices Falling As Much As 90's Crash
According to the Royal Institution of Chartered Surveyors, house prices are falling as quickly today as they did in the crash of the early 1990's and only interest rate cuts will avoid a property meltdown.
There are more estate agents reporting falling house prices now than at any time since 1992. Of the 500 polled, more than 60% said they had experienced falling house prices over the last quarter. Rics spokesman Ian Perry said: 'The Bank of England may have to cut rates further if the market is to remain stable.'
The Bank of England cut rates in December by 0.25% to 5.5%, but held the base rate at 5.5% this month.
Home Information Packs were blamed by most estate agents for the problems in the housing market. All sellers must buy a pack, which deters many of them from putting their home on the market just to 'test the water'.
Before the introduction of HIPs, many homeowners advertised their house for sale with no intention of selling, but were persuaded by a good offer.
There are more estate agents reporting falling house prices now than at any time since 1992. Of the 500 polled, more than 60% said they had experienced falling house prices over the last quarter. Rics spokesman Ian Perry said: 'The Bank of England may have to cut rates further if the market is to remain stable.'
The Bank of England cut rates in December by 0.25% to 5.5%, but held the base rate at 5.5% this month.
Home Information Packs were blamed by most estate agents for the problems in the housing market. All sellers must buy a pack, which deters many of them from putting their home on the market just to 'test the water'.
Before the introduction of HIPs, many homeowners advertised their house for sale with no intention of selling, but were persuaded by a good offer.
Tuesday 15 January 2008
Northern Rocks Future In Shareholders Hand's
Northern Rock Shareholders meet today in Newcastle to decide the company's future. With some shareholders backing moves to restrict the board's ability to offload the company without prior shareholder approval.
But analysts are warning that if such a move is approved, then the ability of a rescue deal to go through will be harder to achieve and this could result in the Government taking steps to nationalise the bank, reducing the worth to the shareholders.
The Government would prefer an existing interested party to take over the bank, but both are struggling to raise the required level of funding to cover the purchase. This means the government are more likely to have to become involved, although that does come with questions about breaching state aid laws.
But analysts are warning that if such a move is approved, then the ability of a rescue deal to go through will be harder to achieve and this could result in the Government taking steps to nationalise the bank, reducing the worth to the shareholders.
The Government would prefer an existing interested party to take over the bank, but both are struggling to raise the required level of funding to cover the purchase. This means the government are more likely to have to become involved, although that does come with questions about breaching state aid laws.
Monday 14 January 2008
No Home Insurance For Floods
Insurers have warned that government spending on flood defences is too little and that they may not insure home owners in at risk areas against flood damage. If insurance firms decide not to cover high risk areas from flood damage, 570,000 properties could be left susceptible to loss if they were hit by further flooding.
The Government's latest spending review announced it would spend just £2.15bn on flood defences, which is not enough according to the Association of British Insurers and they have warned that much more is required.
Stephen Haddrill, director general of the ABI, said: 'Government spending for the next three years is less than we were asking for, even before the floods.' and said the spending plan shows that Chancellor Alistair Darling has 'completely failed to grasp the importance of improving Britain's flood defences'.
The ABI had urged the government to spend £2.25bn over 3 years, but it believes that there is a need for more investment. Insurers have so far spent £3bn putting right the damage caused by this year's floods.
An ABI spokesman said: 'We have committed to continue to provide cover for households in high risk areas, but we will now have to review this.'
Norwich Union, the UK's largest insurer, warned in August that its premiums for homes with increased risk of flooding would be hiked by 10%.
The Government's latest spending review announced it would spend just £2.15bn on flood defences, which is not enough according to the Association of British Insurers and they have warned that much more is required.
Stephen Haddrill, director general of the ABI, said: 'Government spending for the next three years is less than we were asking for, even before the floods.' and said the spending plan shows that Chancellor Alistair Darling has 'completely failed to grasp the importance of improving Britain's flood defences'.
The ABI had urged the government to spend £2.25bn over 3 years, but it believes that there is a need for more investment. Insurers have so far spent £3bn putting right the damage caused by this year's floods.
An ABI spokesman said: 'We have committed to continue to provide cover for households in high risk areas, but we will now have to review this.'
Norwich Union, the UK's largest insurer, warned in August that its premiums for homes with increased risk of flooding would be hiked by 10%.
Thursday 10 January 2008
Pressure To Reduce Interest Rates
The Bank of England has again come under mounting pressure to annouce an interest rate cut after retailers and house builders have been left struggling. Both sectors have been affected by trading figures and share prices are down on major players.
Tuesday 8 January 2008
Shock Leap Prompts Warnings
The latest Halifax house price indexed shows that the average cost of a house increased by 1.3% (£2,500) to £197,000 in December. This follows 3 months of drops. The brings the annual rate of increase to just 5.2% in 2007.
In contrast, the Nationwide's figures showed a fall of 0.5% in the same month. The Halifax's 3 month figure showed a drop of 0.8% in the fourth quarter of 2007. This is the first quarterly drop since mid 2000 and the largest since 1995.
Halifax said a mix of monthly rises and falls was typical of a subdued property market and said it expects house prices to be flat during 2008.
In contrast, the Nationwide's figures showed a fall of 0.5% in the same month. The Halifax's 3 month figure showed a drop of 0.8% in the fourth quarter of 2007. This is the first quarterly drop since mid 2000 and the largest since 1995.
Halifax said a mix of monthly rises and falls was typical of a subdued property market and said it expects house prices to be flat during 2008.
Monday 7 January 2008
Calls to Cut Interest Rates
The Bnk of England this week faces calls to cut interest rates to save the UK economy. Financial experts are calling for the bank to cut rates as they claim the economy is on the brink, but the Bank of England (which announces it's decision on Thursday) will also be considering rising inflation, fuelled by rising oil prices. Generally, analysts predict the interest rate remaining untouched.
Wednesday 2 January 2008
Interest Repayment Rates Soar
A study by USwitch has revealed that Britain's interest repayments have increased by almost 16% - up £12.7bn to £93bn per year. This suggests that millions are struggling to keep up repayments and some could end up bankrupt.
The average family is paying £3,744 per year in interest charges. This is in part caused by the series of interest rate rises, but the December interest rate reduction has not been passed on by all lenders.
The report also showed that 38% of credit card applicants in the previous 6 months had been turned down and 19% of personal loan applicants were also unsuccessful, as the lenders take a tougher line on who they will lend money to.
The average family is paying £3,744 per year in interest charges. This is in part caused by the series of interest rate rises, but the December interest rate reduction has not been passed on by all lenders.
The report also showed that 38% of credit card applicants in the previous 6 months had been turned down and 19% of personal loan applicants were also unsuccessful, as the lenders take a tougher line on who they will lend money to.
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