Fri 31st Aug, 2007
House Price Rises
According to two of the country’s largest home loan lenders, house prices will only rise by six percent this year. Halifax and Nationwide have announced that they expect the house price growth to slow between now and the end of December.
Because of the recent interest rate rises lenders are starting to see the effects that it is having on customers and are predicting the house price growth to slowly come to a halt especially if the Bank of England continues to rise the interest rates. Although the house price growth was still going strong in the early months of this year, the hikes in interest rates have made some effect, as there are now signs that the housing market is slowing. The slow growth in the housing market is expected to continue with the house price inflation easing up over the second half of this year.
If the house prices at the end of 2007 are just six percent higher than they started at in the beginning of the year, then this year will see one of the smallest increase in house prices since 1995. It will also be the below the long-term average of an eight percent growth a year. Nationwide is predicting the house price growth to fall from eleven percent to around five to eight percent. The house price growth is believed to have slowed due to the interest rate increases as well as the rising food prices and the lack of earnings growth, which in effect has caused many first-time buyers to find it almost impossible to find a foothold on the property ladder.
Debt charities are bracing themselves for another wave of enquiries from consumers at the end of the quarter when more fixed rate mortgages come to an end. This year has already seen a surge in the number of people defaulting on loans and other credit agreements due to an inability to meet repayments.