UK’s biggest mortgage lender: house prices rise in January
February 10, 2009 by admin
Filed under Mortgage News
The latest house price survey from Halifax has shown that average house prices rose by 1.9% in January, compared with December.
The move more than compensates for December’s monthly decline of 1.6%.
However, Halifax itself warned that analysts should not pay too much attention to figures from a single month – instead pointing towards the past three months, in which the average house price has fallen by 5.1%.
UK House Prices 2008
January 2, 2009 by admin
Filed under Mortgage News
For 2008 as a whole, prices fell 16.2%, the biggest annual decline since Halifax began keeping records in 1983.
House price predictions
December 30, 2008 by admin
Filed under Mortgage News
Nationwide and Halifax, two of the UK’s biggest mortgage lenders, have decided not to make firm predictions on house prices in 2009.
The two building societies have built up a reputation for making house price predictions in recent years, and are closely followed by the media.
But both have decided not to make predictions for 2009, with Halifax stating that it is “not appropriate” to make predictions at this time, while a Nationwide spokesperson said: “Things are changing so rapidly in the market, which makes it very difficult to forecast”, according to the BBC.
Months ago, the Council of Mortgage Lenders said that it would be “futile” to make its own house price predictions with the market so unpredictable.
A spokesperson for Debt Advisers Direct commented: “Although no predictions have been made, this is significant news in itself, because it reflects the great level of uncertainty currently facing the housing market.
“The risk is that if more people experience financial difficulty and fall into debt, more homes will be repossessed, and house values will fall even further. If lenders begin to lend more and economic conditions improve, we could see the beginnings of a recovery, although analysts disagree as to when this could happen.
USA: Will 4.50% 30-year mortgages arrest the decline in housing prices
December 19, 2008 by admin
Filed under Mortgage News
Will 4.50% 30-year mortgages arrest the decline in housing prices? (Mankiw Blog)
House prices suffer smallest drop in 12 months
November 29, 2008 by admin
Filed under Mortgage News
The average house price fell by just 0.4% in November, according to the Nationwide House Price Index.
The value of the average house fell by just £430 in November – significantly less than in previous months. Between April and May, for example, prices fell by around £5,000.
This means the annual rate of house price decline has dropped from 14.6% last month to 13.9%.
Mortgage provider Nationwide Building Society stated that although the fiscal measures announced in the Pre-Budget Statement could have some indirect effect on the housing market, the measures announced to improve activity in the mortgage / housing market are more likely to help.
The Nationwide Press Release went on to state that ‘The estimated one-third of borrowers on tracker mortgages will have benefited one-for-one from base rate cuts. About one fifth of borrowers are on their lender’s standard variable rate (SVR) [mortgage]. Although SVRs do not change automatically when the base rate moves, most lenders have so far passed on a large part of the Bank of England’s 2.75% worth of base rate cuts since December 2007’.
Finally, it stated that while people on a fixed-rate mortgage don’t benefit directly from the cuts, they will face ‘much less of a payment shock’ when they come to the end of their mortgage deals.
US Sub-prime Mortgage Jitters Affecting the UK Stock Market
November 17, 2008 by admin
Filed under Mortgage Articles
The panic selling and lack of confidence in the stock markets can be traced back to the collapse of the sub-prime mortgage market in the USA. Rising delinquencies and defaults amongst sub-prime mortgage borrowers in the USA have led to a reassessment of the value of such holdings by investment bankers who bought heavily in securities for the risk. They are watching the potential paper value of their investments virtually disappear overnight as US house prices collapse, provoking panic and attempts at consolidation in almost equal measures.
Sub-prime mortgages are usually given to those who can’t prove their income or have poor credit status, or maybe even both. In return for receiving higher interest rates from borrowers, lenders are willing to take a risk on this type of bad credit loan. When house prices are increasing, the risk is minimal because if the borrower defaults, the lender has a charge on the property and can therefore force the sale of the property recouping the initial investment, any interest due and recovery charges.
However, in a market where house prices are dropping, as it is in the US, the value of the property may become less than the outstanding liability leaving the lender with a significant loss. Because US sub-prime lenders have the least ability to absorb defaults as most of their borrowers take out 100% mortgages, they are most prone to collapse if it all goes wrong.
The largest sub-prime lender in the US New Century issued sub-prime loans amounting to $33.9 billion last year alone. It is now being investigated by federal investigators to establish whether impropriety featured in their business practices. It is the bad debts recorded by lenders such as New Century that are causing the extreme jitters in financial markets throughout the world, causing analysts to question whether the situation will be repeated in the UK. That has prompted many UK lenders to evaluate their most at-risk loans to determine their exposure and ensure that they have an adequate amount of capital to cover the potential losses. Thankfully, the UK market is thought to be less exposed to sub-prime lending than the US market. Plus, providing house prices in the UK continue to rise or remain stable then lenders that have issued such bad credit loans to homeowners will not be affected. Any threat will materialise if house values in the UK fall as the amount of equity in properties will also drop, and that could lead to the sort of financial chaos witnessed in the US.